Tax Facts
Affluent ‘Advice Seekers’ Want One Advisor but Seek Better Options: Cerulli
by Michael S. Fischer
October 16, 2024
Eighty-two percent of "Advice Seekers" with at least $100,000 in investable assets may prefer a single financial provider but are actively monitoring the landscape for better solutions, according to research released Wednesday by Cerulli Associates.
"A key takeaway for platform providers is that the next generation of affluent clients, represented by Advice Seekers, have a high and broad set of expectations for the services that should be available to them," Scott Smith, Cerulli's director of client relationships, said in a statement.
"To retain these clients, advisors will need to dedicate themselves to understanding their circumstances and goals and offer solutions every step of the way in order to secure their trust — and assets."
Cerulli categorizes investors in four behavioral advice segments: Passive, Self-Reliant, Advice Seekers and Advisor Reliant. Advice Seekers are optimistic and open to new investment options. They prefer high advisor engagement and are willing to pay for advice. They seek to balance portfolio involvement with guidance and are willing to cede discretion.
The research showed that Advice Seekers tend to default to a preference for incumbent providers as they search for solutions better suited to their requirements. When they establish a trusted advisor relationship, they then are likely to migrate to the Advisor-Reliant segment, which has relatively low risk tolerance and sees value in formal financial planning.
Advice Seekers, comprising 17% of affluent investors, reported an average relationship length of eight years, including 46% with relationships of less than five years, which is 11 percentage points higher than any other behavioral advice orientation segment.
After starting a relationship, 93% of Advice Seekers said they look to their current provider when they consider adding a new product or service. Yet, 41% said they plan to switch some or all their assets to another provider in the next 12 months.
"Despite high overall satisfaction levels — 92% of Advice Seekers believe their financial advisor can solve their financial needs — this cohort is not yet committed," Smith said. "While an advice provider may initially serve the needs of an affluent investor, their preferences may change, and until they firmly establish a trusted advisor relationship, they may look elsewhere."
According to the research, three-quarters of Advice Seekers said they need more advice than they have in the past, higher than any other behavioral segment reported.
A provider may not have a proprietary offering that is the best solution to every need, Cerulli said, but by helping clients assess their current needs and honestly recommending proprietary or external solutions that best fit these needs, advisors can bolster their credibility with clients.
The original version of this story was published on ThinkAdvisor.
October 16, 2024
Eighty-two percent of "Advice Seekers" with at least $100,000 in investable assets may prefer a single financial provider but are actively monitoring the landscape for better solutions, according to research released Wednesday by Cerulli Associates.
"A key takeaway for platform providers is that the next generation of affluent clients, represented by Advice Seekers, have a high and broad set of expectations for the services that should be available to them," Scott Smith, Cerulli's director of client relationships, said in a statement.
"To retain these clients, advisors will need to dedicate themselves to understanding their circumstances and goals and offer solutions every step of the way in order to secure their trust — and assets."
Cerulli categorizes investors in four behavioral advice segments: Passive, Self-Reliant, Advice Seekers and Advisor Reliant. Advice Seekers are optimistic and open to new investment options. They prefer high advisor engagement and are willing to pay for advice. They seek to balance portfolio involvement with guidance and are willing to cede discretion.
The research showed that Advice Seekers tend to default to a preference for incumbent providers as they search for solutions better suited to their requirements. When they establish a trusted advisor relationship, they then are likely to migrate to the Advisor-Reliant segment, which has relatively low risk tolerance and sees value in formal financial planning.
Advice Seekers, comprising 17% of affluent investors, reported an average relationship length of eight years, including 46% with relationships of less than five years, which is 11 percentage points higher than any other behavioral advice orientation segment.
After starting a relationship, 93% of Advice Seekers said they look to their current provider when they consider adding a new product or service. Yet, 41% said they plan to switch some or all their assets to another provider in the next 12 months.
"Despite high overall satisfaction levels — 92% of Advice Seekers believe their financial advisor can solve their financial needs — this cohort is not yet committed," Smith said. "While an advice provider may initially serve the needs of an affluent investor, their preferences may change, and until they firmly establish a trusted advisor relationship, they may look elsewhere."
According to the research, three-quarters of Advice Seekers said they need more advice than they have in the past, higher than any other behavioral segment reported.
A provider may not have a proprietary offering that is the best solution to every need, Cerulli said, but by helping clients assess their current needs and honestly recommending proprietary or external solutions that best fit these needs, advisors can bolster their credibility with clients.
The original version of this story was published on ThinkAdvisor.
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