Financial professionals are not providing investors with a comprehensive picture of their financial well-being, according to a white paper released Wednesday by Albridge Solutions, a Pershing affiliate.
The paper suggests that the quarterly reports investors typically receive about their financial plans lack an accurate and complete picture of how, or even whether, they are achieving their goals.
When financial professionals formulate a financial plan, the paper said, they assess an investor’s current position, set goals and put in place an action plan. Subsequently, they send a quarterly report that provides investment performance against historical values, benchmarks and peers.
However, Albridge noted, these reports fail to tell investors how their investments and their personal inflows and outflows are performing in the face of market fluctuations and economic volatility.
“Investors are demanding greater information about their investments from their investment professionals and when that need is fulfilled, we find it actually increases investor confidence,” Gregory Pacholski, chief executive of Albridge Solutions, said in a statement. “The prevailing fear that providing investors with too much information in a down market will cause them to reconsider their investment is simply unfounded.”
Indeed, according to the paper, the research shows that as trust between the investor and advisor increases, an investor may allow management of a greater amount of household wealth.
The paper offers strategies to help investment professionals gain and retain clients, the statement said.
Other findings in the paper include the following:
- Investors want more sophisticated, transparent, personalized performance data, regardless of portfolio size.
- Providing money-weighted return reports gives investors a more accurate and complete investing tool, and builds a deeper level of confidence and trust.