Some Readers’ Comments on “Investors Are Relying More on Their Financial Advisors. Here’s Why.” (From Barron’s)
~ Sunday, October 29, 2023 Blog Post ~
In the Barron’s article “Investors Are Relying More on Their Financial Advisors. Here’s Why,” I found sensible comments made by some readers. I support financial advisory firms, yet their services can be truly expensive, especially those by mainstream, established companies delivering premium, bespoke advice and caters to ultra-high-net-worth individuals or UHNWI.
Thus, I agree with some of the readers whose comments I included below this blog entry. It is worthy not to avail of a financial advisor’s service to make matters cost-effective. This measure is recommended if a client is knowledgeable about investing and market movements and has the luxury of time to follow the developments impacting his investment portfolio.
Investors Are Relying More on Their Financial Advisors. Here’s Why.” (From Barron’s)
By Kenneth Corbin, October 23, 2023
Affluent investors are increasingly relying on their investment advisors to guide their finances, and in turn are expecting a higher level of service from their financial professionals, according to a new report from researcher Cerulli Associates.
Cerulli finds that investors, especially wealthy ones, are becoming more willing to pay for advice. One reason is because macroeconomic turmoil is on the rise. And a separate trend is also contributing: They want their advisors to do more for them than just manage their investments.
“Affluent investors are passionate about making sure that their advisors are offering solutions customized to their needs and goals,” says Scott Smith, Cerulli’s director of advice relationships. “To align themselves with these priorities, advisors must dedicate themselves to understanding the circumstances, preferences, and goals of each client household at least as much as they do to researching the product solutions they offer to reach them.”
Over the past year, Cerulli has seen the proportion of investors it classifies as “advisor-reliant” increase from 36% to 43%. Those investors depend on their advisors far more than the categories Cerulli dubs passive investors, self-directed investors, and advice seekers. Unlike that last category, advisor-reliant investors don’t involve themselves directly in financial planning and investments, preferring instead that their advisor asserts discretionary authority over their account.
The report identifies a significant gap between the service level investors would like from their financial services providers and what they experience. Fifty-seven percent of investors say they would prefer to use a single firm for most of their financial needs. Of those, just 25% say they have been able to consolidate their activity into a single provider “often because of limited offerings from their primary provider or challenges in consolidating assets.”
The trend of mounting client expectations hasn’t been lost on the larger registered investment advisor firms, which have been actively acquiring and recruiting specialists in fields like tax planning and accounting, estate and trust services, and law in order to add complementary services to their core wealth management offering.
For example, last week, Modern Wealth Management, a private-equity-backed RIA that launched earlier this year with the stated goal of becoming a prominent national firm, announced the purchase of Martin James Investment and Tax Management, saying the deal furthers its development of a “fully-integrated, holistic wealth management platform” replete with experts tax planning and other specialties.
Cerulli argues that the increasing appetite for personalized investment advice mirrors the macro trend in the industry of investors gravitating toward full-service investment advisors and away from transaction-based brokerage relationships.
The researcher reports that 55% of “advised assets” today reside in fiduciary advisory accounts, up from 34% in 2011.
Cerulli also argues that advisors looking to expand their practices and service offerings must make an assessment of the specific services clients are looking for that aren’t available through their firm and then build out those areas.
“To serve the next generation of clients,” the report concludes, “providers must embrace the opportunity to build their platforms around the preferences and goals of advice seekers rather than trying to convince them that the firm’s current offerings are exactly what they need.”
Source:
https://www.barrons.com/advisor/articles/advisor-reliant-investors-cerulli-5dd8de89
Comments:
Quentin Gessner, 24 October, 2023
No one will ever care more about your money — than you. Educate yourself and handle your own assets in self-directed investments. Paying high fees to an “advisor,” who may or may not know what they are doing, is just asking to have your assets eroded over time.
>John Haynes, 25 October, 2023
- I agree. Charlie Munger stated the same sentiment in one of his books I read recently.
JOHN LUTZ, 24 October, 2023
Absolutely true! The trend is toward meeting the client’s needs, by providing a comprehensive financial plan that address all their specific financial goals and objectives!! Then, one by one, working towards achieving them, while building a firm foundation of friendship, respect and trust!
>Jen Doyle, 24 October, 2023
Spoken like a financial advisor. I’m glad I have chosen NOT to have spent my working life saving millions of dollars and then allowing a financial advisor to help themselves to 1% plus for the rest of my life. If financial advisors had any ability, they would only get paid if they exceeded a particular benchmark that matched the clients investments. None of them do that because they can’t beat the benchmark. I don’t need to pay someone to shuffle my hard earned resources around to various funds and assets. Good luck to those of you who do.
>Valued Reader, 25 October, 2023
maybe you don’t have to follow them, listernig to others perspectives are nice sometimes, no ?
