Close Close

Financial Planning > Behavioral Finance

Crisis causes advisors to shift recommendations, increase client contact

Your article was successfully shared with the contacts you provided.

In a dramatic shift in advisor sentiment, full-service brokerages and large national banks are continually losing the appeal they once had among advisors, who now look more favorably on local banks and well-known insurance and mutual funds companies, according to a study from Phoenix Marketing International.

“A financial services firm must be perceived as conducting business with the highest ethical standards, as a company my clients can trust, and having a stellar industry reputation,” Sarah Thompson, Phoenix VP managing the semi-annual study said in a statement. “Also of interest is that several household-name firms are now viewed less favorably by advisors and these companies will likely receive fewer product recommendations going forward. Firms like AIG come to mind.”

American Funds, Franklin Templeton and Vanguard topped the list of well-known firms that are making the most favorable impression on advisors. As for recommending a brand to their clients, advisors were apt to choose John Hancock, MetLife and Vanguard.

The viewpoints are going to continue like this for a while, with no exact timeframe, the study shows. Tweny-five percent of advisors see the crisis lasting for five years; one-in-five thinks it will come to an end this year.

One thing is clear, however. Advisors say no American has been safe from market decline and the crisis will no doubt bring long-term effects, most likely on businesses.

So how are advisors handling this? Advisors say their client contact has picked up, and this has strengthened client relationships. Advisors also say they’re recommending less-risky investments or those not recommended in the past and that they will emphasize more trusted firms.

The Phoenix study was conducted among 898 financial advisors who sell securities, retirement services and/or insurance products. Study data are representative of the U.S. financial advisors universe grouped by the type of firm at which advisors work.

Also reported are detailed evaluations of 31 broker-targeted print advertisements representing 21 leading brands such as Ameriprise, Charles Schwab, Fidelity, Guardian, Janus, Lincoln Financial, Massachusetts Financial Services, Nationwide, Oppenheimer, Prudential, Sun Life, TD Ameritrade, The Hartford and Vanguard Print ads that achieved the highest overall assessment were for Barclays, MassMutual and T.Rowe Price.

“Conversely, the least successful ads share a number of common weaknesses observed in recent years by Phoenix and promote the offerings of Raymond James, State Street and TIAA-CREF,” Thompson added.