New survey results find that financial clients, particularly for those at the younger end of the spectrum, are expressing a desire to step beyond traditional conversations with their financial advisors.
Based on a survey of more than 2,000 financial clients between the ages of 30 and 75, the Future of Client-Advisor Relationships study by AIG Life & Retirement and the MIT AgeLab reveals that clients’ trust and satisfaction with their financial advisor increases when both parties are willing to broaden their conversations and engage in a more transparent, holistic approach to financial planning.
This approach, according to the study, requires going beyond traditional concerns regarding financial and retirement advice, and engaging on topics that are top of mind for clients. In addition to future goals and aspirations, these include health and future care, identity theft and fraud prevention, housing, and work and career transitions.
“While portfolio performance, good service and financial expertise remain important drivers of satisfaction, clients are increasingly looking to have more meaningful conversations with their financial advisors,” says AIG Life & Retirement’s Chief Executive Officer Kevin Hogan.
Broadening the Conversation
Respondents who report the highest levels of satisfaction are more likely to say they have discussed a variety of topics with their financial professional.
Retirement Planning: Along with physical health, respondents say they are most concerned with their financial plan for retirement. While the vast majority (92%) of clients surveyed have already discussed retirement with a financial professional, 85% say they want to continue discussing the topic. Two-thirds of those who have not discussed their financial plan for retirement say they want to, reinforcing the point that retirement planning remains a crucial part of the conversation.
Health and Future Care: When asked to identify which topics are top of mind, respondents largely cited physical health; however, more than half (57%) say they have not discussed it with their advisor. Younger respondents (ages 30-45) are more likely to have discussed physical health with their financial professional, with more than three out of four (78%) saying they’d like to do so again. Across all ages, potential expenses for their own care is the health and security topic that clients most want to broach for the first time (53%).
Identity Theft and Fraud Prevention: An emerging area of concern for clients are topics related to identity theft and fraud. This is especially relevant for older clients (ages 61-75) who say this is a top concern yet who are least likely to have had a related conversation with their advisor (only 30%). Nearly all clients who have had this conversation are open to continuing the discussion (97%). Of those who have not discussed the topic, the survey found that 80% are open to doing so.
Housing: Across all four topics surveyed, housing is the topic that clients are most eager to revisit—especially younger clients, where 88% say they want to return to the topic. Among those who have not yet discussed their current housing situation, most want or are willing to have an initial conversation (79%), with the youngest clients again expressing the greatest level of interest (92%).
Family Finances: In addition to talking about their own finances, more than half of clients (58%) say they have discussed family finances with their financial advisor. Moreover, 82% of younger clients expect their financial advisor to continue to advise them on this topic, as do 74% of middle-aged clients (ages 46-60) and 54% of older clients (ages 61-75).
The Ideal Advisor
The study also explored factors beyond financial performance that drive client satisfaction. The top driver for middle‐aged and older clients—and the second most important driver for younger clients—is the advisor’s understanding of their financial and life goals, underscoring the importance of deepening client conversations.
“While robo-advice—or advice by algorithm—brings efficiency, technology alone cannot replicate the full value proposition of a highly engaged advisor,” explains MIT AgeLab Director Joe Coughlin,Ph.D. “The balance comes from the more personal, ‘softer’ aspects of the relationship—and relationships, boiled down, consist of conversations.”
When asked about the role an ideal financial professional should play, more than half (54%) say “helping me plan for the future.” Additionally, more than a third of younger clients say they view their ideal advisor as a life coach (40%) and cite their financial advisor’s network (53%) and personality (48%) as key drivers of satisfaction.
The survey also finds that most clients are satisfied with their current financial professional, yet nearly one in five (19%) say it is possible they could part ways. And while two of the top four reasons for leaving relate to portfolio performance and service (49% and 48%, respectively), the other two—relocation (28%) and lack of personal connection (25%)—are not related to financial matters.
With more clients getting used to virtual meetings, “relocation” could become a lesser concern for financial advisors who are prepared to make a virtual relationship easier for clients, the study observes. “By broadening conversations to include non‐financial topics that are of importance to clients, there is an opportunity to deepen personal connections,” the study further suggests.
The survey of 2,038 participants was conducted by MIT AgeLab from March 6-26, 2020. Participants ranged in age from 30 to 75, reported a yearly household income of $50,000 or more, had total savings of $50,000 or more, and all reported regularly working with a financial advisor.
