Demand for financial advice has increased substantially along with client expectations

Data shows that delivering a carefully considered financial plan that effectively addresses clients’ needs typically translates to higher levels of financial assurance and a better overall experience. Aon’s latest research in partnership with the Money Management Institute (MMI) — which surveyed 1,500 investors and 1,405 financial advisers across the US — found that 52 per cent of investors say the value of advice has increased post crisis and nearly a quarter (23 per cent) of individuals under 45 years of age had their first financial planning discussion during the Covid-19 pandemic.

When considering this new reality, wealth advisers have an opportunity to utilise the tools and resources at their disposal to improve satisfaction and efficiency. Examples of this include initiating frequent client interactions, as well as redirecting focus from wealthier, more established individuals to younger clients and helping them align their investments with their personal values. In turn, this could lead to investors allocating more assets and a higher share of wallet to their financial adviser or firm.

This article unpacks the key elements driving financial confidence and perceptions around quality financial planning. Wealth management advisers should consider the following areas to set themselves apart.

Focus more on delivering financial planning and advice to younger clients.

Historically, wealth advisers have concentrated on high net worth individuals, who often fall into an older age group. This is because financial planning is a time-intensive activity, and servicing clients who do not meet a certain investable asset threshold can be expensive and unprofitable.

Approximately three in five investors report having had no financial planning advice in the last 12 months. Yet, with increased demand for financial advice since the onset of the pandemic, are wealth advisers missing an opportunity to grow relationships and share guidance for the future?

Creating a cost-efficient solution to engage the next generation of clients that blends automated plan advice with some personal interactions, is a solid place to start.

There is no one-size-fits-all solution. Treat financial planning as a custom process.

Financial planning and financial confidence go hand-in-hand, so it is critical to get it right. Planning for retirement is an important driver for clients seeking financial advice. However, advisers may wish to develop relationships around other pivotal life events too, such as purchasing property, starting a family or relocation.

A client’s age and life stage can influence not only when advice is sought, but also the nature of the client’s goals. For example, clients in their wealth accumulation phase (55 years old or younger) tend to plan for property purchases and family nest eggs, while those in their wealth consolidation phase usually plan for retirement and the management of complex affairs surrounding inheritance tax and wealth transfer plans, wills, and legal powers of attorney.

As part of their outreach activities and improving customisation of their approach, advisers should continue to communicate the benefits of regular financial planning, ranging from improved financial resilience to the ability to respond to unforeseen circumstances.

Personal values and investing have become a mainstream theme and should be part of the financial planning process.

Some advisers are making financial planning more impactful by reflecting clients’ values in their investment strategies. Doing so has the potential to markedly improve the overall client experience and satisfaction with specific touch points and services. The difference in satisfaction is particularly stark when compared with clients who feel their values are not reflected (Figure 2).

Our research shows that advisers initiating a values-based discussion positively influences the net promoter score and likelihood of the client recommending the firm or adviser to a personal or professional connection. Three in five (61 per cent) of advisers say that integrating values across their clients’ investments has always been an important element of their relationships. A further third of advisers note that they have changed their views around values-based investing in the last six months.

Although the majority (67 per cent) of advisers say they always bring up values as part of their financial planning process, more than a quarter (28 per cent) only bring it up if they sense that values are important to their client. These figures are in line with 2019 results, which may suggest that advisers are still relying too heavily on their intuition.

To recalibrate the gaps between client-adviser perceptions, wealth managers should make values-based discussions a more formal part of their annual review and financial planning process.

Next steps

The pandemic has underscored the importance of and demand for financial advice. Financial planning offers clients of all generations and life stages the opportunity to take stock and recalibrate their affairs. Interest is especially visible from the next generation of clients, who have now lived through two pivotal financial events and are keen to create a buffer around their circumstances, while also aligning their investments with personal values.

Quality financial planning improves client confidence, satisfaction and financial optimism — and is therefore mutually beneficial to clients and advisers. However, as mentioned earlier, certain underserved segments require a rethink in approach. Wealth managers therefore have the chance to demonstrate value like never before.

The challenge for firms now lies in creating a hybrid solution that enables financial planners to cost-efficiently address the needs and complexities of different client cohorts, while also delivering a high-quality experience. If done correctly, advisers will build client trust and optimise the financial planning process for all parties involved.

Joan Lensing is chief programming officer at the Money Management Institute and David Lo is head of US client insight, Human Capital Solutions, at Aon