Investors Expect Advisers to Connect Their Financial Plan to Their Values

Research finds that if this goal is met, advisers’ share of wallet increases.

Money Management Institute (MMI) and Aon have issued a research report, “Advisory Solutions: Expectations and Experiences,” that explores how advisers could better serve their clients. MMI and Aon say they plan to issue three more reports to help advisers in light of the challenges they face, including the rise of passive investing, fee pressures, regulatory changes and rapidly evolving investor needs.

MMI and Aon say that investors today “want their advisers to connect their financial plans to their values, making the best use of the data and technology available in the market.” Investors expect advisers to use digital resources to get a handle on their investment “emotional intelligence,” or EQ.

While advisory practices have become proficient at trying to meet investors’ life goals, those investors want advisers to align their investments with their values, according to MMI and Aon. Only 44% of advisers think values-based investing is important to clients, while 76% of investors want this type of service.

Younger investors, those under the age of 45, are even more focused on values-based investing, and their values are even more diverse, the report says. Unfortunately, this group feels even more strongly than older investors that their advisers are failing them in this area.

“When investors’ values are reflected in their portfolios, overall satisfaction, satisfaction with financial planning and share of wallet all rise significantly,” the report says.

Advisers also need to be in contact with clients to update their financial plan at least once a year—but only 44% of investors report having heard from their adviser in the past year. “Investors who recall a planning interaction in the past year are significantly more satisfied with their adviser, their firm—and are more likely to recommend [their adviser] to a friend or family member,” the report says.

Investors also want their adviser to meet their needs as they pertain to their age and gender, whereas advisers tend to put more emphasis on their formal characteristics, such as their qualifications and expertise, MMI and Aon say.

“Firms are investing heavily into financial planning tools and adviser development—and clients see the potential of these in helping them better engage with their finances and their wealth manager,” the report says. “However, just over half (51%) of advisers consider the technology provided by their firm to be leading in the wealth space,” and only 41% of clients would agree.

Top-performing advisers are having discussions with clients about values-based investing, but they say they are not getting high-quality data or tools on environmental, social and governance (ESG) investing from their firms.

Calls to Action

MMI and Aon lay out eight steps practices can take to help advisers provide values-based investing, starting with educating advisers about the value of learning about the approach.

Next, they say that advisory practices can set themselves apart from the competition by connecting client goals and values to financial outcomes.

Give advisers a list of questions they should ask their clients when designing their financial plan, and provide advisers with financial planning tools that will be easy to use, the report says.

The companies add that firms should teach advisers to understand the various goals of different generations and coach them to be able confident in working with people of all ages.

Advisory practices should also invest in digital tools—such as goals-based financial planning and customer relationship management (CRM) tools. Finally, MMI and Aon say, practices should offer ESG investments.