The traditional advice and guidance model whereby investors pay fees for their investment selections and receive advice for free isn’t resonating among older investors, according to a study by Hearts & Wallets. These older investors would prefer to pay for personalized advice from a trusted, reliable source.
“The financial services industry has a tremendous opportunity to enhance the model and vastly improve its ability to help investors meet their goals based on our concept tests,” said Chris Brown, a principal of Hearts & Wallets. “If someone offered you free advice, how much trust would you have in that advice? Today, the industry has a very confusing fee structure. Investors want to know what they are paying for, and fee clarity is a major trust driver as our prior research has shown.”
Areas that older investors said they would like help on include personal financial, particularly retirement and income planning. They also don’t trust the motives of brokers selling them stocks or bonds and would like better investment advice.
“Investors said they like the idea of separating investment and personal finance advice,” said Laura Varas, a principal of Hearts & Wallets. “They also want to have more choice in terms of a la carte service and flexible fees. This desire was most marked among the mass affluent who might not have enough assets to qualify for more personalized service, but would like the option to pay for more consistent, higher-touch support.”
The full report is titled, “Addressing the Elephant in Financial Services: Insights Into How Older Investors Really Want to Receive, and Pay for, Investment and Personal Financial Advice.”