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Advisers Dispatches Value Investing

Investors and Advisers Disagree on Most Valuable Attributes

Investors and financial advisers don’t see eye to eye when it comes to what investors value in their advisers and what advisers believe is important to investors, according to a recent survey.

by AAII Staff | April 2019

Investors and financial advisers don’t see eye to eye when it comes to what investors value in their advisers and what advisers believe is important to investors, according to a recent survey.

Ranking a list of 15 different attributes, 693 individual investors chose the characteristics they perceived as valuable, while 161 advisers ranked what they believed investors wanted out of the client relationship. The researchers found that the biggest gaps between the two groups were on helping clients maximize their returns, helping investors stay in emotional control and understanding investors and their individual needs; the smallest gaps were in communication and explanation of financial concepts, advisers presenting themselves as professional and helping investors reach financial goals.

The survey also concluded that while investors found the technical side of financial advice more valuable than other ancillary or behavioral benefits, advisers believe personalizing portfolios to their client’s needs was a top priority. Other research showed that tailoring the client’s approach toward individualized strategies resulted in 15% more client wealth, but the findings of this survey suggest that “investors do not see [this personalization’s] value.”

With the research emphasizing interpersonal interaction as valuable to a portfolio’s bottom line, the researchers concluded that perceptions on both sides need to change for overall success, writing that “investors have internalized the industry’s past tendency to over-emphasize returns and benchmark relative performance.”

 

 

 

 

 

 

 

 

 

 

 

 

Source: “The Value of Advice: What Investors Think, What Advisors Think, and How Everyone Can Get on the Same Page,” by Samantha Lamas, Ryan O. Murphy, Ph.D., and Ray Sin, Ph.D.; Morningstar, February 2019.

Discussion

Joe B. from PA posted over 7 years ago:

For my money, my first concern is insuring that a true fiduciary relationship is developed from day one. If I don't trust my financial planner to put me first, then why would I work with him/her?


Mike Weller from WA posted over 7 years ago:

I tend to view things quantitatively. It would be nice to see the results of the survey, not some writer's interpretation of the results.


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