For this year’s Dollars & Sense special report, we’re doing more than top-line analysis of the survey data. We always have more data than we can use, and this year we decided to comb through the deeper layers of the statistical onion in search of anomalies and patterns that shed light on some of the sticky issues client-facing advisors either already face on a day-to-day basis, or likely will face sooner or later.
Our report focuses on four key issues. The first is the issue of investor and advisor perceptions of the best way to achieve the client’s investment objectives.
When are you most likely to see a disconnect between what advisors and investors see as the best way forward? What are some of the psychological factors that often sit behind a client’s resistance to their advisor’s counsel? What can advisors do to gain the trust they need to bridge the gap? In this business, effective communication skills are an absolute must.
A big part of being a good communicator is having the ability to understand where your clients need the most help. Not everyone learns the same way: different cues register with different degrees of success with different people, so understanding how to get your message across to the specific individual across the desk is a big advantage.
Our survey data showed some interesting relationships between assets under management and the amount of effort advisors have to put in to explain certain products and asset classes. Our report takes a look at these patterns and offers some great advice on effective communication strategies.
The Do-It-Yourself craze has long since made its way into the investment world, and while advisors needn’t fear it will put them out of business, it introduces a range of issues they ought to be attentive to. Our special report takes a look at what different types of clients are likely to have in their DIY accounts, and some of the challenges and opportunities these findings present for advisors.
We also lay out our often jaw-dropping findings on the level of confidence advisor-only and DIY-only investors have in their investments.
We thank Invesco Trimark for its sponsorship of this year’s Dollars & Sense research.
Getting through analysis paralysis By Joel Kranc – Advisors sometimes face an uphill battle when it comes to advising clients in turbulent times. The key is a risk manager that can be part advisor and part psychologist. It’s not uncommon for clients to voice serious doubts about their advisor’s advice, or even completely reject it. “If a lawyer or accountant were to ask a client what should be done, I suspect the client would say, ‘Whatever you think—you’re the professional.’ It’s amazing that in our industry, even to this day, there’s still such a struggle to build up a legitimate professionalism,” says Michael Lynds, senior vice-president of products and services at Macquarie Private Wealth.
Narrowing the gap By Joel Kranc – More and more Do-It-Yourself investors are looking to ETFs to save money and increase flexibility. And it’s not just for rich clients. The Do-It-Yourself (DIY) industry has grown exponentially over the last decade. Stores like Home Depot and Rona allow people from all walks of life to take on the home renovation jobs they might not have considered attempting a generation ago. Then there are the channels—HGTV, the DIY Channel and others dedicated to weekend warriors who fancy themselves hammer-ready to tackle any job.
Dividing your time By Leigh Doyle – Could how much you manage as an advisor dictate what you need to talk to your clients about? It seems there might be a connection, according to this year’s Dollars & Sense survey. The survey revealed that what advisors spend the most time talking to their clients about often depends on the value of their assets under management (AUM). The five most mentioned areas of discussion were: investment portfolio planning/asset allocation; investment research and selection; life, health or disability insurance needs; post-retirement income needs; and trusts and wills.
Throwing darts at a stock table By Dean DiSpalatro – It’s right there in the newspaper for all to see: Building your own financial plan is easy, and almost nobody needs an advisor. Right? Think again. Our annual Dollars & Sense survey shows that those who do all their investing through Do-It-Yourself (DIY) accounts, with no advisor consultation, are nearly three times more likely to have little or no confidence in their investments, when compared to those who do all their investing through an advisor.