Older Investors Dissatisfied with Traditional Advice Model

Research from Hearts and Wallets found that some investors would prefer to pay for personalized planning advice. The study, “Addressing the Elephant in Financial Services: Insights into How Older Investors Really Want to Receive, and Pay for, Investment and Personal Financial Advice,” found investors need help and want a reliable source to trust with their concerns.   

Investors say the industry is not meeting their needs regarding personal finance questions and investment advice, Hearts and Wallets reported. They were receptive to ideas of restructuring the current model, even if that resulted in additional fees. Possible changes included the separation of investment and personal finance advice, offering more choices in terms of à la carte service and flexible fees, and having advisers accept fiduciary status in order to legally ensure that their clients’ interests are placed over adviser interests.   

“The financial services industry has a tremendous opportunity to enhance the model and vastly improve its ability to help investors meet their goals based on our concept tests,” Chris Brown, Hearts & Wallets principal. “If someone offered you free advice, how much trust would you have in that advice? Today, the industry has a very confusing fee structure. Investors want to know what they are paying for, and fee clarity is a major trust driver.”  

The study was conducted in April 2011 and surveyed nine focus groups, including “Pre-Retirees” (Americans who identify themselves as within five years of retirement and the household historical primary breadwinner stopping full-time work); “Late Career Investors” (Americans ages 50 to 65 who are not yet retired and the household primary breadwinner is not considering retirement within the next five years); and “Post-Retirees” (individuals who are currently retired).