Advisors, Are You Delivering the Services Your Clients Want?

Are You Delivering the Services Your Clients Want?

Bridging the Gap Between Investor Expectations and Advisor Services

In the world of financial advice, it’s essential for advisors to meet the needs and expectations of their clients. However, recent research from CEG Insights reveals a striking gap between what clients believe they are receiving from their advisors and what advisors think they are delivering. The findings, from a white paper titled “Addressing the Gap Between Investors’ Expectations and Advisor Services,” highlight the critical need for clear communication and alignment between financial advisors and their clients.

Financial Planning: A Disconnect in Understanding

According to the research, 92.3% of investors want financial planning services, and 95% of advisors claim they provide them. Yet, only 41% of investors feel they are actually receiving this service. This significant discrepancy suggests that the issue may not be the delivery of the service itself, but rather how it is communicated and perceived by clients.

Advisors may be delivering financial planning advice without explicitly identifying it as such. As a result, clients might not realize they are benefiting from a service they desire. This highlights the importance of advisors clearly naming and explaining the services they offer during client meetings. Ensuring clients understand what they are receiving is a crucial step in bridging this gap.

Investment Management: Another Communication Breakdown

Investment management is arguably one of the most fundamental services that advisors provide. Yet, the research found that while 92% of clients want this service, only 73% feel they are receiving it. On the flip side, 98% of advisors believe they are delivering investment management services to their clients.

Again, this points to a breakdown in communication. Advisors must take extra steps to clarify their role and the services they provide. Clients, in turn, should feel empowered to ask for clarity on any service they are unsure about.

Wealth Transfer Advice: An Overlooked Opportunity

One of the most alarming findings in the research is the gap between the demand for wealth transfer advice and the perceived delivery of this service. An overwhelming 92.5% of clients express a desire for advice on wealth transfer, yet only 17% feel they are receiving it. This is particularly concerning in light of the ongoing “Great American Wealth Transfer,” during which over $84 trillion is expected to pass from older generations to Gen X, millennials, and Gen Z by 2045.

Advisors need to take a proactive approach in initiating wealth transfer discussions with both older and younger clients. These conversations are essential for helping clients plan for the future and ensuring that their heirs are prepared. Clients also need to initiate these discussions with their advisors, particularly if they feel this topic has not been adequately addressed.

The Importance of Communication

Ultimately, the research points to one key takeaway: clear communication is essential for bridging the gap between advisor services and client expectations. Advisors must make sure clients are fully aware of the breadth of services they offer, whether it’s financial planning, investment management, or wealth transfer advice. Advisors can take cues from other professionals, such as doctors and dentists, who provide clear information about their services through various communication channels.

Similarly, clients need to communicate openly and specifically about their needs. It’s important for clients to speak up and ask questions if they feel uncertain about the services they are receiving. Building strong relationships based on mutual understanding and clarity will help both advisors and clients achieve their goals.

Understanding Equities and Dividends

While discussing client-advisor communication, it’s also worth taking a moment to address some fundamental investment concepts. Equities, or stocks, represent ownership in a company. Stocks have historically been one of the best investments for long-term growth and inflation protection. Over the last 20 years, the Dow Jones Industrial Average has delivered an average annualized return of 10.1%, significantly outpacing inflation, which averaged 2.51% over the same period.

In addition to appreciation, stocks may also provide returns through dividends. Dividends are payments made by companies to shareholders, typically on a quarterly basis. Dividends can be a source of steady income and help investors remain committed to their investments during periods of market volatility. Over time, dividend payments often grow, contributing to the compounding effect that can enhance overall returns.

Looking Ahead

As the financial landscape continues to evolve, the importance of effective communication between advisors and clients will only grow. Advisors should strive to ensure that clients fully understand the value of the services they receive, while clients should feel comfortable voicing their needs and expectations. By working together, advisors and clients can navigate the complexities of financial planning, investment management, and wealth transfer, ensuring a successful financial future.