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Clients, Especially the Young, Want Credentialed Advisors: IMCA

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The Investment Management Consultants Association has released the findings of a survey on investor expectations of their advisors, and it turns out that the younger the investor, the more highly they value their advisor holding professional credentials, especially licenses and registrations that they are not required to hold.

As part of the 2014 Advisor Impact “Economics of Loyalty” research, 84% of the millennials surveyed said it was “important” or “critical” that their advisors obtain voluntary certifications. Among the total of 1,200 investors surveyed, 62% felt that way about their advisors, while 65% said they found it either “somewhat important” or “critical” that their advisor’s credential was issued “by an objective, nonprofit, third-party certifier.” 

The survey polled 1,200 individuals who have worked with or are currently working with a financial advisor, and was conducted online in February. IMCA contracted with Advisor Impact, the international research firm headed by Julie Littlechild, to include several custom questions as part of the annual survey. 

In a statement, IMCA CEO and Executive Director Sean Walters called the findings “the latest in a long line of consumer research to foretell rising client expectations, particularly among millennials,” but noted as well that the survey is one of the first in the industry “to rank the most important criteria for advisor credentials.”

To Walters’ point, when respondents were asked which of six advisor competencies was “most important to you,” 59% chose investment management, followed by “holistic financial planning” at 22% and tax and estate planning knowledge and strategies at 9%. While 79% of respondents said it was important that their advisor “met a rigorous set of standards to be certified,” an even higher number — 81% — said it was “important” or “critical” that their advisors meet “ongoing standards” to maintain those credentials. Another 80% of those surveyed thought it important that an advisor would lose his or her credentials if he or she “failed to meet ethics standards.” 

The survey also asked how respondents came to choose their current advisor, and recommendations from a friend or family member topped the list, at 46%, followed by “general word of mouth” at 22%. However, among millennial investors (ages 18 to 29), 22% said they used online search to help identify their advisor, compared with only 7% of total respondents.

Wealthier clients also differed in the resources they used to pick an advisor. Among respondents with a minimum of $5 million in investable assets, 16% cited “advisor rankings,” like those published by Barron’s and Money magazines, compared with 9% of overall respondents who said they used third-party rankings to choose their advisors.

Finally, of those high-net-worth investors, 17% of those surveyed said they used online searches to identify their advisors, compared with 7% of all respondents.


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