For Clients, Relationship Trumps Performance

Consumers currently working with financial advisers are generally satisfied with their relationships, but they are seeking more personalized engagement and a more human-centric approach to their investments, according to survey data from Hartford Funds.

Twice as many investors value relationships with their financial advisers over performance, the data found. Only 32% of respondents felt that a financial adviser who is focused on delivering superior investment performance is the most important factor.

The overwhelming majority of respondents (86%) identified an area where they’d like to see improvement from their adviser. Responses for top areas in need of improvement ranged from wanting advisers to take more time on education about the financial planning process and their investments (22%), to more personalized advice (14%), followed by wanting advisers to care more about them as people and not just clients (13%).

Conversations with clients don’t always seem to leverage context, says John Diehl, senior vice president of strategic markets at Hartford Funds. Retirement (61%) was the main driver that sparked respondents to begin working with a financial adviser, with survey participants saying they wanted to be able to plan wisely. Just half of respondents (51%) strongly agreed that their adviser discusses with them what life will be like when they retire, and nearly one in five said their financial adviser doesn’t touch on that topic at all.

“Advisers understand that context is key in helping clients set the right goals for retirement,” Diehl says, but when retirement is so often the trigger for the relationship, “it is alarming that more than half of respondents feel that advisers aren’t talking to them about life in retirement. Advisers need to find creative ways to continue the conversation about goals and the motivations for reaching them.”

Next: How to place the conversation in the right context.

Demographics Differences

Advisers have an opportunity to engage with pre-retirees between the ages of 45 and 64, Hartford Funds says. Nineteen percent of these respondents would like more personalized advice and to feel the adviser cares about them as people. Despite approaching retirement age and an increasing need for income, just 47% of respondents in this age group strongly agree that their financial adviser talks about what life will be like when they retire.

Advisers have been making a conscious effort to engage women—according to research from Russell Investments, advisers can score points with female clients by listening actively and giving holistic advice—and Hartford also finds in its survey that the one skill advisers need to develop for successful relationships with female clients is listening.

More than four out of five women (84%) strongly agree their adviser actively listens, and nearly the same number (79%) strongly agree their financial adviser provides them with the appropriate guidance for their individual needs. Women were also 15% more likely than men (59% versus 44%) to strongly agree that their financial advisers speak with them about what life will be like in retirement. Perhaps as a result, 74% of women strongly agree they have a trusted relationship with their financial adviser both professionally and personally.

Next: The relationship with an adviser takes the top value spot for investors. 

Clients Need More than Data

Other findings of the study are:

• 75% of survey respondents strongly agreed with the statement, “My financial adviser understands my specific life stage and my individual goals;”
• 68% of respondents said they have a trusted relationship with a financial adviser, both professionally and personally, enough to discuss non-financial personal matters, such as major life occurrences;
• 66% of respondents said their top priority in the relationship is having a financial adviser who is aware of and invested in their individual situation and life stage, and works with them to meet their goals and objectives; and
• 32% said an adviser who focuses on delivering or strives to deliver superior investment performance is most important factor.

The survey underscores that quantitative performance alone is not enough, according to Diehl, who notes that advisers must also take a human-centric approach to advice with holistic financial counsel based on clients’ individual goals and needs. “The emotional relationship between advisers and clients has never been more important than it is today,” Diehl said. “We live in a time when information is at consumers’ fingertips, and it is the job of the adviser to quiet the noise.”

Hartford Funds surveyed more than 500 consumers who currently work with financial advisers by phone April 9 to 29 to gain insights into Americans’ preferences and drivers when it comes to their client-adviser relationships.

More information on how to navigate client discussions, anxiety and other challenges and what the future of financial advice looks like can be found on Hartford Funds’ website.