Advisors and Clients Are Not on the Same Page for Financial Planning Conversations
June 15, 2011 (Business Wire) According to Russell Investments' latest Financial Professional Outlook (FPO), a quarterly survey of U.S. financial advisors, investors and advisors are initiating conversations on distinctly different topics. For the current installment of the survey, Russell collected the opinions of nearly 450 financial advisors working in more than 200 national, regional and independent advisory firms nationwide.
When asked about the most common topics of conversation in the past six months, advisors indicated that their clients most frequently initiated conversations about concerns with government policy (58%), market volatility (51%) and global events (41%), while advisors themselves initiated conversations about portfolio performance (42%), keeping up with inflation (35%), estate planning (35%) and tax implications of investing (32%).
"The latest survey results underscore that the advisor has a critical role to play when it comes to helping clients focus and avoid becoming distracted by short-term market moves and big news stories," said Kristin Gibson, director of strategic distribution partnerships for Russell Investments. "In order for advisors and their clients to get on the same page, advisors first need to acknowledge and address investors' concerns with short-term topics, and then educate them on the importance of establishing goals and sticking to a long-term plan."
Advisors and investors continue to hold differing views on the markets
The perspective gap between advisors and investors was further reinforced by differing opinions on market sentiment. In the latest survey, 76% of advisors reported being optimistic about the capital markets broadly over the next three years, but only 29% say that their clients are optimistic. This represents the continuation of a persisting gap seen in previous iterations of the FPO survey; in February 2011, 86% of advisors were optimistic about the markets and only 36% felt their clients shared these views.
"Advisors and their clients are having conversations that are starting in very different places. Investors are looking for a reality check on their current situation and direction as to what they need to do in the future and advisors can help clients feel more confident by first putting their concerns into perspective and then refocusing them. Russell has developed a number of tools to assist advisors with these conversations, including the Economic Indicators Dashboard and the Business Cycle Index," said Gibson.
Gibson added that the disparities in focus and market sentiment could also be driven by the fact that while most advisors (88%) believe that clients come to them first for advice regarding their most important financial issues, they also understand that investors make use of alternate resources as part of their investment decision-making process. For example, more than 90% of the advisors surveyed indicated that clients e-mail or call them with information they find in media outlets, and 82% said the same was true of information clients gather from family and friends.
Advisors recognize importance of tailoring approach to client needs
In the latest FPO survey, 81% of advisors report that they believe client needs differ by gender, and nearly two-thirds (65%) say that they find investor sentiment on the markets also differs by gender.
"Advisors recognize that there are discernible differences in client needs and perspectives based on gender, and that assets controlled or influenced by women are in no way incidental. In the latest survey, advisors reported that in two-thirds of client households (66% on average), a woman is involved in investment decision-making," said Gibson. "Female investors are an important and historically underserved target market and successful advisors understand how their priorities, preferences and needs may differ and work diligently to develop relationships in a way that reflects this understanding."
More information about the FPO, including a video and a full report of findings, can be found at: www.russell.com/Helping-Advisors/YourBusiness/FinancialProfessionalOutlook.asp.