Survey Zeroes in on Traits of Valued Advisers

“Proving Your Worth: Uncovering the Traits of the Valued Adviser” explores how investors viewed their financial advisers’ performance and examines opportunities for advisers to enhance their value proposition to better meet the needs of key client segments, including Generation X and Generation Y investors.

According to the report, advisers who proved their worth— “valued advisers”—enjoyed the benefits of clients who were more engaged, trusting and loyal, with 66% saying they would likely stay with their advisers if they switched firms (compared with 37% for investors without a valued adviser). Valued advisers also gained three times the number of referrals, significantly higher share of wallet (71% vs. 49%) and more clients looking to consolidate assets with them (39% vs. 24%).

Investors who highly regarded their advisers cited three key reasons: Valued advisers were focused on long-term investment strategies, provided comprehensive guidance, focused more on holistic planning services, and leveraged technology to foster a more collaborative relationship.

“The definition of the valued adviser is clearly evolving,” said Ross Ozer, senior vice president, Fidelity institutional wealth services. “It’s no longer just about money management, but about providing peace of mind, getting to know the client personally and using technology to enhance the relationship, not replace it. Financial advisers may want to consider putting energy into these areas to help ensure that they are among the 57% proving their worth to investors.”

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Younger Investors Seek Simplicity, Technology

Financial advisers could enhance their value and better meet the goals of important client segments, including Gen X and Gen Y investors. Relationships between valued advisers and their Gen X and Gen Y investors were stronger than for other investors, the report found. Investor referrals from this group were close to 80% higher, and 70% of these investors depended more on their adviser in the past year (compared with 49% of all investors).

As a result, this group had a slightly different perspective when it came to proving worth. Sixty-five percent of Gen X and Gen Y investors felt it takes a lot to manage all the different aspects of their financial lives, and 70% were looking to simplify their finances. While they were inclined to try new types of investments and take on risk, they also wanted more communication from their advisers, with 59% of Gen X and Gen Y investors expecting their advisers to contact them if the stock market changed a lot in one day.

Technology played a more integral role for this group. More Gen X and Gen Y investors said that technology enhanced their relationship with their advisers (55% vs. 28% for older investors) and that it enabled more effective collaboration (62% vs. 33%). Gen X and Gen Y investors were more likely to use social media (by 23 percentage points), phones (by 23 percentage points) and tablets (by 21 percentage points) as tools for their financial activities than their older counterparts.

Key issues for financial advisers to consider in working with Gen X and Gen Y investors include:

Educate and minimize complexity. To help Gen X and Gen Y feel more receptive and less overwhelmed, advisers may want to consider minimizing complexity in the investment process and focusing on educating this group on newer or riskier investments.

Leverage technology to enhance engagement. Advisers might want to consider increasing communication with this group, especially through the use of technology, including smartphones, tablets, text, emails, webinars and webcams.

“Proving Your Worth: Uncovering the Traits of the Valued Adviser” is the third report in Fidelity’s annual “Insights on Advice” series. The report is available on Fidelity’s interactive website.