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What Advisors Get Wrong About Clients

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Planners seem to be overestimating the investment knowledge -- and, perhaps more important, the risk appetite -- of their clients.

Advisors are three times more likely to describe clients as “very knowledgeable” about investing than investors do themselves (42% vs. 12%, respectively), according to a new Accenture survey of 400 financial advisors and 1,000 investors in the United States.

And there's more:

  • Only 1% of advisors describe their clients as “not knowledgeable” about investing, compared with 25% of investors who self-identify this way.
  • Advisors are more than twice as likely to see their clients as “aggressive” investors than investors see themselves (28% vs. 13%, respectively).
  • And 67% of advisors claim to have a “personal relationship” with their clients, whereas only 38% of clients view this relationship as “personal.” (Ouch.) 


Alex Pigliucci, global managing director of Accenture Wealth and Asset Management Services, says that the research suggests that financial advisors need to focus on better understanding their clients’ views and objectives to foster closer, more trusting relationships. “With the explosion of ‘self-serve’ digital investment channels and increasingly complex investment products, the importance of this will only grow," he says.

The reputation of the finance industry was undoubtedly damaged during the 2008 crisis, and the next generation of investors is wary of trusting too easily. For advisors to connect with the next generation of investors, Pigliucci says, advisors need to stop talking over clients' heads -- offering more online tools and greater transparency through digital communication to help build a relationship.

Presupposing that clients have more knowledge than they actually do runs the risk of eroding trust rather than building it, he says.


One solution for helping advisors better understand their clients is through the use of social media, Accenture says. “Firms need to implement deliberate social media strategies and provide their advisors with the tools and guidance to make their digital interaction meaningful,” Pigliucci says. "This will help create tighter client relationships, increase the firm’s visibility on digital channels and, ultimately, drive business for the institution."

Financial advisors already view social media as an increasingly important tool to engage clients, grow their business and better understand clients’ investment goals, Accenture found -- with 48% interacting daily with clients through social media.

My take? Social media is all well and good, but it's not a primary tool of communication. Perhaps social media may in fact be aggravating this apparent divide that advisors have with their clients, with emails, texts, LinkedIn messages and tweets replacing the irreplaceable face-to-face interaction and vocal dialogue.

With all the pressure on financial advisors to connect with their clients digitally, it becomes clear that social media is a tool to be used to supplement face-to-face interaction and phone calls, not to replace it.

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