Advisers and investors are increasingly on the same page, Russell Investments finds in its Financial Professional Outlook Survey from the fourth quarter of 2013. 

In the last quarter of the year, adviser optimism dipped to 79% from 83% in the previous quarter, and investor optimist rose slightly, to 36% from 31% in Q3. These may not seem like significant moves, but investor optimism as reported by advisers in fact matched its previous high point reached in February 2011. Similarly, the “optimism gap,” or the difference between adviser and investor optimism, narrowed to a record low of 43%.

This narrower optimism gap could have an impact on adviser conversations with clients, according to Sam Ushio, director of practice management for Russell Investments’ U.S. adviser-sold business, and author of the report. “Advisers need to be proactive and engage their clients in outcome-oriented conversations,” Ushio tells PLANADVISER.

“On the heels of last year’s dramatic market gains, it’s important to emphasize goals-based discussions rather than take the easy opportunity to discuss performance that’s now in the rearview mirror,” Ushio says. The most successful advisers, according to Russell, are those who anchor their value on achieving goals and not just portfolio management. Clients need an adviser to provide focus and clarity across different types of market conditions. 

More In Common

A surprising survey result, Ushio says, was the commonality of topics initiated by advisers and clients, particularly portfolio rebalancing—the highest-ranked topic for advisers in this most recent survey. “There is a window for advisers to reinforce the benefits of diversification while delivering value in terms of rebalancing back to the plan,” Ushio says. “We encourage advisers to establish an ongoing dialogue with clients to spotlight progress toward goals, rather than recent market performance.”

Growing the book of business and deepening client relationships were mentioned as top concerns of advisers. “Deepening client relationships is a product of first identifying the client’s objectives with a thorough discovery, followed by consistent value delivery that aligns with the client’s goals,” Ushio says. Russell’s coaching program focuses on helping an adviser to gather a deep understanding of a client’s goals. Progress toward these goals must be a focus, Ushio says. A simple process can become complicated if an adviser loses sight of the fact that the primary responsibility of the adviser is helping a client achieve their goals.

To improve retention, advisers need to take action and initiate client conversations and contact. Ushio says a more proactive approach to service is preferable to simply allowing the client to determine when or how often service is necessary. 

The reactionary model often leads to the emergence of two potentially problematic participant segments, Ushio says. “Clients who are at risk because of little to no service, and clients with service demands that weigh down the business’ ability to proactively engage the larger client base.”

To deal with this, Ushio suggests first deciding which clients fall into which segment. Next, set service strategies for each, so that the adviser knows the best proactive efforts to make. Many advisers have inherent business conflicts within their client relationship strategies—not to mention, he says, a lack of strategies. “Observing the economics that drive client profitability can help advisers improve retention by delivering consistent value that aligns with the adviser’s segmentation model,” Ushio says.

Russell Investments conducted the Financial Professional Outlook Survey in November. Responses are from a broad group of 257 U.S. financial advisers representing over 120 firms. The report can be downloaded here.