Morningstar’s Advisor Insights Survey for 2019 is still pertinent for financial professionals in the new year.
More than 650 advisors shared their views on the industry, with a good deal of their focus resting on gaining new clients.
What is the primary goal of financial advisors? Not surprisingly, “growing the business via more clients” topped the list. Increasing assets under management with current customers came second, followed closely by efficiency improvements, client retention and new technology. Succession planning was far down the table, with “selling the business” in last place – that we may take as a positive sign.
So adding more clients is the top priority. Ironically, when asked to describe the main challenges to expanding their business, respondent gave the same answer: “acquiring new clients.” The difficulty of hiring talent and stiff market competition were a distant second and third, while the robo-advisory threat was far down the list.
The last two points shouldn’t cloud the issue: competition is fierce from both human and machine sources. That’s why acquiring clients is so difficult. Meanwhile, customer preferences are changing: value investing is in the spotlight, with absolute financial performance no longer in vogue.
What are advisors doing to meet the challenge? Gaining referrals for new business and boosting AUM with current clients top their lists. Marketing efforts aimed at bringing in new customers sits at a rather distant third.
Marketing is the odd man out – why? A simple lack of know-how is partly to blame. Additionally, a disconnect has grown between advisors and clients. When polled, customers ranked maximizing returns at fourth overall, while advisors placed it second. Customers need educating, too: many don’t understand the importance of professional coaching, planning and investment discipline, among other things that advisors regularly provide.
Advisors must learn what customers want today – the true basis of successful marketing. Explaining the value of our expertise in building a financial plan that works also needs a bit more trumpeting.
For more, please see:
What’s Holding Advisors Back From Effective Marketing? | Morningstar