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Clients Want Personalized Service, Not Just Returns: Hartford Funds

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Clients want more personalized service from their advisors, a survey released Monday by Hartford Funds found. Respondents were twice as likely to say they valued their relationship with their advisor over performance.

“Expectations around solid investment performance are still there in the minds of the consumer,” John Diehl, senior vice president of strategic markets for Hartford Funds, told ThinkAdvisor on Monday. “The difficult thing for advisors is that is almost expected these days. [Clients think,] ‘I wouldn’t be in your office if I didn’t think you had the capability of delivering great investment performance.’”

Diehl said, “There are a lot of outlets that could deliver superior investment performance, but what differentiates one from another, this is where I think the personal touch comes in.”

One such touch is in educating clients, which 22% of respondents said was an area they wanted to see their advisor improve in. Diehl suggested sharing stories of other successful clients.

“I think what clients want to hear these days is ‘What are the experiences of other people like me?’ When you think about a world where many of their choices are influenced by other people’s experiences, like reading user reviews on the Web or hearing stories or testimonies from friends and family,” he said, it’s helpful to hear from a financial advisor about what they have seen people do right and what they’ve seen people do that they regretted.

He stressed that “advisors need to understand that it is about more than providing solid investment results. Don’t get me wrong, that certainly is still important; but the value of advice now goes beyond just investment advice and helps clients in terms of lifestyle advice — how do people stay engaged, what kind of activities do they participate in.”

Diehl referred to a paper from the MIT Age Lab that suggests three questions to ask clients to get them thinking about their retirement lifestyle:

  1. Who will change my light bulbs?
  2. How will I get an ice cream cone?
  3. Who will I have lunch with?

While these questions seem mundane, they can help clients look beyond asset accumulation and retirement income. “Talking to those clients about where they intend to live, whether the home that they live in today is going to be the one that they’ll be able to age in successfully in their 70s, 80s and 90s” is an important part of retirement planning, Diehl said. “It’s questions about the quality of life, not only the quantity of wealth that’s available to fund it.”

If clients are looking for more personalized education and advice from their advisors, how much of a threat really are robo-advisors to financial services firms? Diehl said that online advice givers are often seen as a black-and-white issue, but “there is a middle ground.”

Many advisors may already be “using pretty sophisticated asset allocation tools,” he said, “but the advisor needs to create a context or frame in which the client can better understand, ‘Why do I own certain types of investments? How are they used in terms of funding the kinds of things I want to do?’”

Although the survey found the biggest area of improvement clients want from their advisors is in education, Diehl warned that “we have to be careful not to just give them the what of the investment, but also give them the why. Why was that used in the portfolio? What does that guard against or give us the opportunity to do? [Advisors have to] translate the wealth into lifestyle.”

— Check out Many Investors Expecting Double-Digit Returns Prefer Lower-Risk Investments on ThinkAdvisor.