Being a ‘Valued’ Advisor

HOLLYWOOD, FLA. - What does it take to be a successful advisor? And how do you prove your worth to clients?

These questions were central to the session on “Strategies for Developing Successful Advisors” at the Bank Insurance & Securities Association’s annual conference Monday.

There are a number of factors at play, but recent studies from Fidelity Investments highlight the three key traits of “valued advisors” and the demographic shifts changing the investor-advisor relationship, said Alexandra Taussig, the Fidelity Investments senior vice president who delivered the presentation.

These demographic shifts tie into the clients’ perception of an advisor’s value. According to Fidelity’s research, 57% felt their advisors proved their worth or helped a “great deal” in navigating the market.

These advisors focus on a few key issues: holistic advice and the client’s peace of mind; offering comprehensive guidance and long term financial planning; and using technology to add value to client relationships.

Meanwhile, Fidelity’s research also indicates that the typical investor and advisor are changing dramatically which inevitably means the client-advisor relationship is changing, too.

“There’s a sea change in who the investor is,” Taussig told the audience.

The “investor 1.0” is typically male, a baby boomer, a delegator, averse to technology and focused on retirement readiness and traditional asset allocation. He probably only desires an annual check –in with his advisor.

Not so for the emerging “investor 2.0,” says Taussig. This new investor is increasingly female, Gen X or Y, and often sitting on the market sidelines after seeing many suffer investing ‘wounds’.

The “Investor 2.0” trusts banks and uses traditional bank products, giving bank advisors a huge advantage, Taussig said. She loves technology and wants to use it with her advisor. She wants to ‘visit’ her money, she wants a validator and she wants to “co-pilot” with her advisor, Taussig said.

As investors change, so do advisors, the research shows. While the “advisor 1.0” is typically a solo practitioner focusing on stock picking and investment management, who sees technology as a on, the “advisor 2.0” works in teams, focuses on relationships and financial planning, and embraces technology, Taussig said.

Interestingly, Gen X and Gen Y advisors, who are nearly 20 years the “advisor 1.0’s” junior, had more in assets under management and make up 57% of advisors. This is counterintuitive considering all the focus on the ‘graying of industry,’ but likely has to do with how many new advisors are joining the industry, Taussig noted.

Given the changing client needs and demographics, Taussig said, planners might consider the following advice to be valued advisors for their clients:

• Focusing on holistic advice and peace of mind
• Offering comprehensive guidance and long term financial planning
• Using technology to add value to the advisor-investor relationship
• Addressing the specific needs of Gen X/Y and female investors

“If you think about these changing demographics, advisors have to figure out how to capture Gen X and Gen Y and female investors,” said Taussig.
Technology is an important part of that, she said. “Firms need to make sure technology is available for advisors and advisors and clients need to use it together.”

Those valued advisors tend to be the ‘advisor 2.0’ advisors. The traits of the valued advisor match up with those of the “advisor 2.0,” but that doesn’t mean the “investor 1.0” will morph into an “investor 2.0” or work with an “advisor 2.0,” Taussig said.