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What Do Investors Want in an Advisor?

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On-the-job-training won’t cut it with investors looking for a financial advisor.

A survey released Thursday by the Certified Financial Planner Board of Standards shows well-off investors are looking for breadth of knowledge and certification backed by examination in choosing an advisor.

The vast majority of investors demanded broad-based expertise rather than a specialist in one or two areas, and nearly half said this was more important than an advisor’s investing track record.

The findings suggest advisory firms may need to rejigger their training programs to meet potential clients’ keener requirements.

Orc International conducted the survey in mid-November of 850 American adults with $100,000 or more of investable assets, excluding their primary residence.

The survey’s findings included these:

  • Some 90% of respondents considered a potential advisor’s certifications important
  • 86% preferred to work with an advisor who had passed a certification exam and completed a rigorous course of education
  • 82% said it was important for a potential advisor to discuss his or her training and certifications, with 39% saying this was very important before engagement
  • 81% preferred to work with an advisor qualified to review all areas of their financial life rather than with a specialist in one or two areas — this was important particularly to women, older or retired investors and those with assets of $500,000 or more
  • 72% said they expected a financial advisor to have received one to four years of training in financial planning
  • 66% said they would abandon or not engage an advisor whose knowledge and training was limited largely to a firm’s products or services
  • 48% said that in choosing a financial professional, knowledge of multiple financial areas trumped the advisor’s investment track record or personal referrals.

“This survey tells us that firms need to rethink their training models to incorporate financial planning competency from the beginning of a new advisor’s training program — not three to four years into their career,” said Joseph Maugeri, the CFP board’s managing director of marketing and corporate relations, said in a statement.

“The days of ‘learning on the job’ seem to not apply anymore when it comes to what competencies consumers now expect of their financial advisors.”

— Check out 7 Ways to Avoid Picking a Bad Advisor on ThinkAdvisor.