If digital is important to investors, and advisors increasingly want to provide their clients with tools to make their lives easier, then what value do advisors bring to the relationship, especially in an increasingly competitive environment? According to the results of our latest Voice of the Advisor Survey, the value is how advisors use these tools to help clients drive performance and outcomes in an enhanced service model.

Online investment managers: Are they a threat?

Only 19 percent of advisors we surveyed believe that online investment managers pose a serious threat to their business model, with 42 percent saying there’s no threat at all. However, there are indications that this could change in coming years. The younger the advisor, the more likely they are to see these firms as a threat, with 27 percent of advisors with only one to three years of experience most likely to say so.

Performance and personal attributes are equally important

Nearly three-quarters (74 percent) of advisors surveyed say the most important factor in a client-advisor relationship is direct access to the advisor. The quality of advice (69 percent) and performance (65 percent) follow closely behind. Interestingly, the frequency of contact between the investor and advisor is least important, but still important at 61 percent. When it comes to advisors’ tenure level, the responses are similar.

The value proposition at work: digital supports long-term planning

More than half of advisors (55 percent) provide financial plans for their clients and 64 percent regularly monitor the investments for performance compared to the plan. Although older advisors are slightly more likely to track the performance of these plans, (70 percent versus 60 percent), they are slightly less likely to use digital tools such as CRM or portfolio risk indicators (67 percent versus 78 percent).

Given that advisors are expected to retire in greater numbers in coming years, firms will need to do more with less to retain clients. These findings give firms some clues:  gradually increase digital options that enable independence while focusing advisor attention on financial planning and goal-setting.

So, how ready are firms to support the future of advisory services? Next week I’ll conclude my series by exploring this topic.

To learn more, check out my previous posts: