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Advisors’ Favorite Value-Add Programs: Social Security, Search for Yield

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Social Security and generating income in a low-rate environment topped the list of value-added tools and programs advisors have used to attract clients in the in the past year.

That is among the many findings of a new study, Value Add Support to Financial Advisors – Insights and Opportunities 2014, by marketing research firm Practical Perspectives, based on a survey of more than 600 financial advisors conducted in May.

“We asked about the programs’ overall impact on a practice,” said Practical Perspectives president Howard Schneider, in an interview with ThinkAdvisor. “In that sense we got very strong reading that 40% said it had a significant impact on their practice and 44% said it had some impact — that’s almost 9 out of 10 advisors who said it had some impact on their practice. So it’s money well spent for the firms that invest in these programs.” 

Value-added programs are a traditional offering of firms that distribute products through financial advisors — broker-dealers, custodians, asset managers and insurance companies. Their purpose is to assist advisors with their marketing and sales activities and, in so doing, attract attention to the providers’ products and engender loyalty.

And indeed, the survey found the value-add programs did impact advisors’ overall impression of the provider, loyalty to the provider, willingness to learn about products and continuing product use.

“In each of these areas, at least 7 out of 10 advisors indicated an impact; more than a third said it had a significant impact on the advisor’s view of the provider,” Schneider said. “It does seem these programs are working.”

What’s more, Schneider — who asked the same questions in a year-ago survey — said there has been a marked increase in value-add programs.

“As the markets get more difficult and challenging and broker-dealers cut back on more of their support, advisors are recognizing that this is very useful to them,” he said.

And most useful to them are the programs offered by American Funds and JPMorgan, the two top providers in this year’s survey.

Next most mentioned are Franklin Templeton, BlackRock/iShares, First Trust, Fidelity, MFS, Oppenheimer and LPL. The most frequently mentioned annuity providers are Jackson and Prudential.

Many of these names also appeared on last year’s list, where BlackRock took top honors. Interestingly, PIMCO, which has been struggling to retain client assets in the past year, also has fallen off the list of top 10 firms noted for value-added support. 

Schneider mentions that the aggregate provider preferences above vary widely based on advisor channel.

Advisors surveyed had the chance to specify what they liked in the value-added programs. So, for example, advisors citing JPMorgan especially value David Kelly, the firm’s chief global strategist whose entertaining presentations on economic and market developments are popular on the advisor lecture circuit.

American Funds has long been admired by advisors for its supported events, and the Practical Perspectives survey finds that advisors turn to BlackRock for its Social Security and 529 plan tools, to First Trust for sales ideas, LPL for social media support, and to Lord Abbett for economic commentary, among others on the long list.

While wirehouse, regional and independent advisors all admire American Funds, preferences vary across channels. The RIAs in particular stand out, with a list that excluded American Funds but rated Charles Schwab, Fidelity and Vanguard highest.

Advisors favoring Schwab cited Liz Ann Sonders as a favored value-add, whereas Vanguard is admired for its white papers.

Overall, Social Security was the value-added tool favored by advisors in the dominant retirement category over the past year, with 73% participating in such programs, compared with 58% in the prior year’s report.

The next most popular retirement topics were generating sustainable income (59%), guaranteed income solutions (55%) and IRA rollovers/plan transfers (51%).

“One of the characteristics of programs that stand out are that they can be used directly with clients or prospects as opposed to being just theoretical in nature,” Schneider says.

“Advisors are stretched … You need to lead these horses to water to make them drink. You need to hold their hands and tell them, ‘These are the three steps you need to take.’”

Going forward, there was little consensus among the surveyed advisors as to what value-added programs they most want to see. Advisors seemed to revert to channel-type, with wirehouse advisors favoring programs that help attract new clients, independents looking for help with practice management and RIAs interested in economic and market analysis.

Schneider calls this seeming discord among advisors an “opportunity” for product providers and distributors.

“If you can create a quality program or tool, you’re likely to find an audience … There are a lot of things advisors need help with and want help with,” he says.

Another challenge lies in the area of not merely providing a tool that can engage new prospects but in converting them to clients.

Asked about the Social Security programs, Schneider said “At least as far as new client acquisition goes, many respondents indicated that it didn’t in and of itself have an impact on the growth of their business. That doesn’t necessarily mean they didn’t see value in it — value comes from being able to engage with a prospective client,” he said, noting that future surveys will devote more attention to the advisors’ ability to close the sale.

Check out How to Turn Workshop Attendees Into Clients on ThinkAdvisor.