Investors generally look to their financial advisors for guidance on investments, savings, and more. Unsurprisingly, they count on them even more during periods of market volatility.
New research from Cerulli Edge – U.S. Asset and Wealth Management Edition, found nearly 75% of advisors’ clients receive some form of financial planning. This number is anticipated to rise to 82% in 2023, as market volatility pushes investors to turn to their advisors. As a result, financial professionals can engage existing clients and gain new ones by offering financial planning services, utilizing effective communication strategies, and implementing financial planning software, said Cerulli in its report. They should especially do so during periods of market volatility, for investors who may not be aware of these service offerings.
According to the research, advisors who offer financial planning find that their clients are better positioned to remain calm despite declining market performance. Investors who are experiencing market volatility for the first time are especially susceptible to speaking with a financial advisor, the study found. “Well-integrated financial planning solutions can help advisors meet investor demand for bespoke planning services efficiently, which can prove invaluable, especially in times of market volatility,” said Scott Smith, director of advice relationships at Cerulli Associates, in a press release.
In addition to financial planning services, Cerulli said advisors should consider developing communication strategies to attract and retain advisory relationships. Almost 40% of retail investors said it is “extremely important” for their advisor to maintain an appropriate amount of contact with them. Advisors can implement this by distributing timely information about the current market and economic situation, and then offering their own analysis.
It’s likely clients will share that information with their personal connections, which can then increase client retention and growth, said Smith. “A thoughtful stream of touchpoints can buoy client satisfaction even as markets falter, allowing advisors to be best positioned for client retention and growth,” he added.
As financial planning becomes more popular, Cerulli said scale will also grow in importance. According to the research, 74% of advisors use financial planning software within their practice, and by 2023 this percentage is expected to reach 82% among firms polled.
Other Insights:
- 48% of respondents under age 40 said that having a financial plan is important to them but they are not currently using a service with their advisors
- Of all respondents, 40% said they do not use an investment professional or advisor because they are confident in their own investment decisions/strategies
- 38% of all respondents cited costs/fees as the reason why they do not use an investment professional or advisor
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