The latest research from Cerulli Associates, “The Cerulli Edge – U.S. Edition, January 2017 Issue,” shows investors in the U.S. express a greater willingness than ever to pay for financial advice.
“In 2008, 40% of respondents indicated that they were interested in paying for advice; by 3Q 2016, the percent grew to 50%,” says Scott Smith, director at Cerulli.
Matching other recent research showing an inversion in the advisory client base, Cerulli finds the desire to pay for advice has “a high correlation with investor wealth and a less robust inverse correlation with investor age … Investors under age 40 express the greatest keenness to pay for financial advice.”
“Investors express an increased interest in paying for the financial advice they receive,” Smith adds. “However, the market has yet to fully embrace their preferences or expectations. To capture marketshare, providers will need to better understand investor preferences about their relationships.”
According to Cerulli, with the rapid growth of digital retailers, traditional wealth management providers must assess the vulnerability of their business models.
“Digital options have become part of the landscape, but consumers facing complex decision processes repeatedly choose to include humans in their service selections. A belief in the trustworthiness and expertise of providers is a crucial element of these relationships,” Smith continues.
“Amid the shifting advice landscape, traditional firms need to deliver value in their relationships in order to compete with digital advice providers,” he concludes. “The rise of digital advice shows that investors are frustrated by the current state of financial advice.”
More information on obtaining this and other Cerulli reports is available here.