How do you get people to buy something they likely need but don't want?
That's the question raised by recent Herbers & Co. research. It revealed that a striking 34% of U.S. households with at least $250,000 of investable assets opt not to work with a financial advisor.
This segment, which we might call the advisor-averse market, represents a huge business development opportunity for advisory firms. But it's one that must be pursued differently from the conventional approach.
Before we discuss how advisors can most effectively penetrate this market, let's look at what our research turned up.
We surveyed 1,000 consumers across the nation, and along with finding that more than a third opted not to work with an advisor, we found that the total is lopsided according to gender: 40% of male respondents reported not having a financial planner, compared with 29% of women. Respondents' reasons for avoiding advisors broke down into five categories:
A desire for independence: 52% of survey respondents cited wanting to maintain independence and handle finances themselves. Some voiced distrust of advisors and financial systems.
Interestingly, respondents with $6 million or more were least likely to prioritize independence — just over 20% did so. On the other hand, among those with wealth between $800,000 and $2.6 million, more than 60% cited a desire for independence.
Doubts about value: 45% of individuals without advisors pointed to uncertainty over the quality of the advisor and value of their advice.
No perceived need: Many people feel they simply don't require the services of a financial planner. Some already received financial advice from a family member or friend. Others said they don't need advice because they've already achieved their goals.
Conflicting values: Some survey respondents said they could not find an advisor who shares their values. Respondents also expressed concern that planners would be judgmental about the state of their finances.
A lack of time: 14% of individuals said the time required to research and choose an advisor prevented them from hiring one.
How to Target
How should advisors target potential clients in this un-advised segment? The key factor here is this cohort, unlike typical advisory clients, does not appreciate the value of advice.
That goes a long way toward understanding why so many want to keep control of their financial decisions, why they believe they can make those decisions on their own, and why they resist the idea of delegating.
Our experience helping clients mine the advisor-averse market suggests that success is best achieved by educating them in a new way and being willing to reframe the advisor-client relationship.
Firms that have successfully converted advisor-averse clients have learned to educate them at the prospect stage of the relationship on how advisors do what they do.
Many prospects who approach advisors aren't interested in delegating responsibility. Rather, they're curious: They want to understand how advisors tackle specific problems. These individuals seek that information so that they can do a better job of being their own advisor.
But that interaction nonetheless tends to validate the advisor's services and engender some trust. It's certainly not what most advisors are used to doing, but educating the curious consumer about how to do the job of an advisor can often open the door to a business relationship.
