“How you explain your services can have an impact on a person’s hiring decision. And if you focus only on the cold, hard facts, you may be deterring some investors.”
New research from Morningstar seeks to answer the all-important question, “Why do people hire financial advisors?”
While help with financial issues would be the obvious choice, the Chicago-based research and investment giant found more nuanced and emotionally-grounded responses than expected.
Behavioralists Danielle Labotka and Samantha Lamas gathered and analyzed data from 312 current advisor clients. They asked the clients to list the reasons why they hired their advisors. The question was open-ended. Because answers could be swayed if asked in person due to factors like who is asking and who else might be in the room, the online format freed respondents to be more open than they otherwise would have.
So, why do clients hire their advisors?
Some hire for a specific financial need, but it’s far from the only reason.
“In fact, 60% of respondents cited an emotionally grounded reason for hiring their financial advisors,” the researchers write. “This suggests that although financial issues are a common driver of client hiring decisions, there is an additional aspect of emotional drivers, such as the degree to which someone feels comfortable making financial decisions and their ability to stay the course.”
Specifically, they add, the findings suggest people are motivated to hire a financial advisor because of reasons pertaining to client discomfort handling financial issues as often as they hire one because of reasons related to a specific financial need.
“However, new clients may not always be willing or able to express the emotional needs they are hoping a financial advisor can meet when seeking one out,” Labotka and Lamas conclude. “Still, advisors can address these emotional drivers by demonstrating to prospective clients the ways in which they can address both financial and emotional concerns in a research-backed way.”
