The terrain for financial advisors is shifting. The ubiquitous adoption of smartphones and the use of social media have changed the way advisors connect with clients. 

Finding the best way to deliver services and information is critical to keeping clients content and attracting new ones. And neither advisors nor clients would ever dare forget the ultimate bottom line: portfolio performance.

To find out what advisors and clients are thinking, EY’s 2014 Wealth Management Survey asked both groups a series of questions.

EY boiled down its findings to a few key points:

  • Advisors and firms must do more to show the lasting value of a goals-based approach.
  • Firms need to make investments to capitalize on wealth transfers and mitigate the risk of losing assets.
  • Portfolio management customization is valued, but employing it can create conflicts with firms who want to maintain consistent management and products.

For the survey, which covered advisors and clients in three wealth groups (mass affluent, high-net-worth individuals and ultra-high net worth individuals), EY partnered with Oxford Economics, which contacted subjects in the U.S. Canada, Brazil and Mexico. For some questions regarding methods of communicating with clients, the answers are broken down by the method as well as the age of the respondents.

In the end, EY concluded that advisors need to “consistently understand and address client needs,” while shifting to a goals-based planning approach. Another opportunity for advisors exists, EY said, as boomers retire and need help in planning for succession. And then there all those channels for reaching clients that must be leveraged. None of them should be ignored.

(For a report on how advisors should use various channels, check out Advisors Should Use Social Media Despite Hurdles: IRI.)

Take a look at EY’s 12 Key Insights for Financial Advisors and Their Clients: 1. TRENDS

Clients: What are the most important trends influencing where you invest your assets today?

  • Holistic goals-based planning: 45%
  • Geographic diversification: 42%
  • Generational wealth transfer: 38%
  • Consolidation of assets into fewer wealth management firms: 37%
  • Access to product specialists: 32%


Advisors: What are the most important trends driving your business growth today?

  • Generational wealth transfer: 55%
  • Holistic goals-based planning: 53%
  • Geographic diversification: 41%
  • Improved client experience and tools: 35%
  • Shift toward non-traditional investments: 32%
  • Consolidation of assets into fewer wealth management firms: 32%


2. BUSINESS FUTURE

Advisors: Which of the following trends represent the greatest risks for your business in the future?

  • Heightened regulation, disclosure and compliance: 67%
  • Generational wealth transfer: 48%
  • Lack of business succession planning: 41%
  • Client desire for self-direction: 32%

3. SATISFACTION

Clients: How satisfied are you, in general, with your current method of interaction with your financial advisor’s firm?

  • Very Satisfied: Mass Affluent, 55%; High Net Worth, 40%; Ultra-High Net Worth, 60%
  • Satisfied: Mass Affluent, 25%; High Net Worth, 20%; Ultra-High Net Worth, 35%
  • Neutral: Mass Affluent, 20%; High Net Worth, 30%; Ultra-High Net Worth, 5%
  • Unsatisfied: Mass Affluent, 0%; High Net Worth, 10%; Ultra-High Net Worth, 0%


Advisors: Do you expect to switch firms in the next three to five years?

  • Yes: 11%
  • No: 89%


4. SUPPORT

Advisors: How satisfied are you with your firm’s level of advisor support?

  • Comprehensive product set: 84%
  • Specialized knowledge: 83%
  • Sales and marketing support: 76%
  • Product sources: 75%
  • Flexible reporting and communication skills: 67%
  • Operations and admin support: 67%
  • Tools: 55%
  • Talent acquisition and Development: 48%

5. INVESTMENT APPROACH

Clients: What level of discretion do you prefer your financial advisor to have as it relates to using a firm’s asset allocation?

  • Some level of advisor discretion: 42%
  • High level of advisor discretion: 37%
  • No advisor discretion: 21%


Advisors: Which of the following best describes your firm’s asset allocation model management policy?

  • Recommended (strongly encouraged): 41%
  • Optional (full advisor discretion): 24%
  • No policy exists: 18%
  • Prescriptive (mandatory): 17%


6. MARKETING

Clients: How are you most likely to learn about a financial advisor with you may wish to work?

  • Personal referral: Baby boomers and older, 86%; Next Gen: 89%
  • Contacted by advisor: Baby boomers and older, 50%; Next Gen: 58%
  • Traditional media exposure: Baby boomers and older, 23%; Next Gen: 16%
  • Industry conferences: Baby boomers and older, 9%; Next Gen: 24%
  • Marketing events: Baby boomers and older, 18%; Next Gen: 18%
  • Nontraditional media exposure: Baby boomers and older, 5%; Next Gen: 21%
  • Marketing campaigns: Baby boomers and older, 14%; Next Gen: 16%


Advisors: What are the most effective ways of reaching and marketing to prospective clients?

  • Advisor-driven campaign: Baby boomers and older, 59%; Next Gen: 59%
  • Advisor-driven campaign events: Baby boomers and older, 44%; Next Gen: 55%
  • Nontraditional media exposure: Baby boomers and older, 23%; Next Gen: 16%
  • Firm-driven campaign: Baby boomers and older, 44%; Next Gen: 16%
  • Traditional media exposure: Baby boomers and older, 35%; Next Gen: 35%
  • Industry conferences: Baby boomers and older, 29%; Next Gen: 25%

7. CLIENT ACQUISITION

Clients: What are the key factors driving your decision to sign on with a financial advisor?

  • Firm reputation/trust: Baby boomers and older, 73%; Next Gen: 63%
  • Referral/advisor reputation: Baby boomers and older, 55%; Next Gen: 55%
  • Advisor’s experience serving clients like me: Baby boomers and older, 45%; Next Gen: 34%
  • Comprehensive product set: Baby boomers and older, 18%; Next Gen: 37%
  • Goal/financial planning: Baby boomers and older, 14%; Next Gen: 29%
  • Digital technology: Baby boomers and older, 23%; Next Gen: 13%
  • Marketing campaigns: Baby boomers and older, 14%; Next Gen: 13%
  • Competitive fees: Baby boomers and older, 18%; Next Gen: 11%
  • Nontraditional media exposure: Baby boomers and older, 0%; Next Gen: 8%


Advisors: For each of the following client segments, what are the key factors driving acquisition?

  • Referral/advisor reputation: Baby boomers and older, 53%; Next Gen: 55%
  • Goal/financial planning: Baby boomers and older, 49%; Next Gen: 52%
  • Firm reputation: Baby boomers and older, 39%; Next Gen: 40%
  • Competitive fees: Baby boomers and older, 32%; Next Gen: 27%
  • Firm-generated leads: Baby boomers and older, 31%; Next Gen: 28%
  • Advisor-acquired lists: Baby boomers and older, 28%; Next Gen: 27%
  • Client segment-specific strategies: Baby boomers and older, 15%; Next Gen: 13%
  • Digital technology: Baby boomers and older, 13%; Next Gen: 19%
  • Prospect management: Baby boomers and older, 7%; Next Gen: 11%

 

8. CLIENT RETENTION

Clients: What are the key factors keeping you with your financial advisor?

  • Portfolio performance: Baby boomers and older, 73%; Next Gen: 68%
  • Advisor relationship: Baby boomers and older, 45%; Next Gen: 53%
  • Firm reputation/trust: Baby boomers and older, 32%; Next Gen: 24%
  • Frequency and quality of interactions of with my financial advisor: Baby boomers and older, 23%; Next Gen: 16%
  • Digital technology/channels: Baby boomers and older, 23%; Next Gen: 26%
  • Transparent reporting: Baby boomers and older, 18%; Next Gen: 8%
  • Comprehensive product set: Baby boomers and older, 18%; Next Gen: 37%
  • Goal/financial planning: Baby boomers and older, 9%; Next Gen: 5%
  • Ability to view my comprehensive financial picture: Baby boomers and older, 5%; Next Gen: 8%


Advisors: What are the key factors driving client retention?

  • Portfolio performance: Baby boomers and older, 67%; Next Gen: 72%
  • Advisor relationship: Baby boomers and older, 71%; Next Gen: 64%
  • Firm reputation/trust: Baby boomers and older, 31%; Next Gen: 31%
  • Frequency and quality of interactions of with my financial advisor: Baby boomers and older, 39%; Next Gen: 43%
  • Digital technology/channels: Baby boomers and older, 9%; Next Gen: 20%
  • Transparent reporting: Baby boomers and older, 4%; Next Gen: 5%
  • Comprehensive product set: Baby boomers and older, 20%; Next Gen: 11%
  • Goal/financial planning: Baby boomers and older, 32%; Next Gen: 31%
  • Ability to view my comprehensive financial picture: Baby boomers and older, 27%; Next Gen: 23%

9. ATTRITION

Clients: If you recently left a financial advisor, what were your primary reasons for doing so?

  • Poor portfolio performance: 68%
  • High fees: 55%
  • Wealth transfer to beneficiary: 41%
  • Limited frequency and/or poor quality of interactions with my financial advisor: 36%
  • Departure of Advisor: 23%
  • Poor service quality: 14%
  • Advisor: When clients leave, what are their primary reasons for doing so?
  • Poor portfolio performance: 63%
  • High fees: 24%
  • Wealth transfer to beneficiary: 39%
  • Limited frequency and/or poor quality of interactions with my financial advisor: 39%
  • Departure of Advisor: 53%
  • Poor service quality: 32%

10. TRANSACTION CHANNELS

Client vs. Advisor Perspectives: Through which channels do you most frequently conduct transactions or obtain other services from your financial advisor?

Today:

  • Face-to-face (in branch): Client: 53%, Advisor: 59%
  • Telephone: Client: 47%, Advisor: 67%
  • Email: Client: 43%, Advisor: 48%
  • Firm website: Client: 22%, Advisor: 12%
  • Smartphone: Client: 20%, Advisor: 7%
  • Online: Client: 20%, Advisor: 23%
  • Face-to-face (out of branch): Client: 15%, Advisor: 79%
  • Tablet: Client: 0%, Advisor: 3%
  • Direct mail: Client: 0%, Advisor: 3%


In three to five years:

  • Face-to-face (in branch): Client: 53%, Advisor: 45%
  • Telephone: Client: 43%, Advisor: 65%
  • Email: Client: 42%, Advisor: 36%
  • Firm website: Client: 20%, Advisor: 16%
  • Smartphone: Client: 20%, Advisor: 13%
  • Online: Client: 20%, Advisor: 36%
  • Face-to-face (out of branch): Client: 18%, Advisor: 73%
  • Tablet: Client: 7%, Advisor: 11%
  • Direct mail: Client: 2%, Advisor: 3%

11. INFORMATION CHANNELS

Client vs. Advisor Perspectives: Through which channels do you most frequently communicate with and receive information from your financial advisor?

Today:

  • Face-to-face (in branch): Client: 53%, Advisor: 52%
  • Telephone: Client: 53%, Advisor: 65%
  • Email: Client: 52%, Advisor: 57%
  • Firm website: Client: 22%, Advisor: 15%
  • Face-to-face (out of branch): Client: 22%, Advisor: 72%
  • Smartphone: Client: 17%, Advisor: 8%
  • Online: Client: 12%, Advisor: 21%
  • Direct mail: Client: 2%, Advisor: 3%
  • Tablet: Client: 10%, Advisor: 7%


In three to five years:

  • Face-to-face (in branch): Client: 48%, Advisor: 47%
  • Telephone: Client: 50%, Advisor: 67%
  • Email: Client: 48%, Advisor: 571%
  • Firm website: Client: 18%, Advisor: 12%
  • Face-to-face (out of branch): Client: 32%, Advisor: 63%
  • Smartphone: Client: 15%, Advisor: 12%
  • Online: Client: 12%, Advisor: 33%
  • Direct mail: Client: 7%, Advisor: 7%
  • Tablet: Client: 2%, Advisor: 9%

12. CHANNEL PREFERENCE BY WEALTH GROUP

Clients: Through which channels do you most frequently communicate with and receive information from your financial advisor?

Today:

  • Face-to-face (in branch): UNHW: 75%, HNW: 55%, MA: 30%
  • Telephone: UNHW: 50%, HNW: 50%, MA: 60%
  • Email: UNHW: 40%, HNW: 55%, MA: 60%
  • Firm website: UNHW: 30%, HNW: 5%, MA: 30%
  • Face-to-face (out of branch): UNHW: 10%, HNW: 45%, MA: 10%
  • Smartphone: UNHW: 5%, HNW: 15%, MA: 30%
  • Online: UNHW: 15%, HNW: 5%, MA: 15%
  • Direct mail: UNHW: 10%, HNW: 5%, MA: 15%
  • Tablet: UNHW: 0%, HNW: 0%, MA: 5%


In three to five years:

  • Face-to-face (in branch): UNHW: 65%, HNW: 45%, MA: 35%
  • Telephone: UNHW: 40%, HNW: 45%, MA: 65%
  • Email: UNHW: 40%, HNW: 50%, MA: 55%
  • Firm website: UNHW: 20%, HNW: 5%, MA: 30%
  • Face-to-face (out of branch): UNHW: 20%, HNW: 55%, MA: 20%
  • Smartphone: UNHW: 5%, HNW: 10%, MA: 30%
  • Online: UNHW: 15%, HNW: 5%, MA: 15%
  • Direct mail: UNHW: 10%, HNW: 5%, MA: 5%
  • Tablet: UNHW: 0%, HNW: 0%, MA: 5%

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