Close Close

Financial Planning > Tax Planning

4 things clients want from advisors that robos can't do

Your article was successfully shared with the contacts you provided.

The robo-advisor naysayers may be heartened by an Investment Management Consultants Association survey finding on what investors want from their advisors.

In the group’s Investor Sentiment Survey of 1,000 investors, 93 percent said it was “important” or “critical” that their advisor “helps them maintain a long-term investing approach,” and 83 percent wanted their advisor to help them “stay calm when the market drops.”

In addition, 80 percent of those surveyed who had $1 million or more in investable assets said it was important or critical that their advisor help them stay current on the latest tax law changes, while 63 percent off the investors surveyed said “providing access to cutting-edge investment strategies” were important or critical.

“The four things that clients want — robo-advisors don’t do any of them,” commented Sean Walters, IMCA’s executive director and CEO, in an interview Monday in Jersey City where the now 30-year-old IMCA was holding a summer educational event for members. 

Speaking in the same interview on a day when the Dow Jones industrial average fell 500 points, IMCA Chairman John Nersesian said the findings partly reflect the fact that clients want advisors to “protect me from myself” in making poor decisions prompted by short-term concerns.

Nersesian, managing director of wealth management services at Nuveen Investments, said the finding that clients want their advisors to stay current on tax law was “music to my ears” since being aware of tax implications “is such an important function” in everything from investing to charitable giving. Tax-law awareness, Nersessian pointed out, also is a “big part” of the curriculum for IMCA’s CPWA designation — Certified Private Wealth Advisor.

However, there was a disconnect in the survey findings between what clients want from their advisors and what advisors are actually providing to clients. The survey found that while a total of 77 percent of respondents said knowledge of tax-law changes was important or critical for their advisor to have (80 percent of the HNW respondents), only 53 percent of those investors surveyed reported that their advisor keeps them up to date with changes in the tax code.

The survey suggests that many advisors may also be falling short when it comes to giving clients access to those “cutting-edge investment strategies.” While 63 percent of respondents said doing so was important, only 57 percent of those surveyed agreed that their current advisor provided that access. While they may not be able to articulate it, Nersesian said what clients want from their advisors in the investing arena is “beyond asset allocation,” with advisors showing an appreciation for and taking a “different approach to risk” in investing.

Nersesian also said that when it came to charitable giving, 80 percent of families “want help,” but that only 30 percent of advisors are “actually having a conversation” around philanthropy with their clients.

The survey was conducted earlier this year by Julie Littlechild’s If Not Now Research firm; the 1,041 respondents had investable assets ranging from $50,000 to more than $1 million.

The survey found that those investors want their advisors to be competent, a desire that extends to wanting their advisors to hold voluntary certifications beyond the licenses and registrations required by regulators.

Among the HNW cohort in the survey, 69 percent said it’s important or critical that their advisor hold those voluntary certifications. Among all respondents, 72 percent said it was critical or important that their advisors hold credentials issued by an “objective, nonprofit, third party certifier,” and 82 percent said they wanted their advisor to meet a “rigorous set of standards” in achieving those standards, including educational, experience and ethical components.

Walters read the findings on clients’ desire for competency and third-party certifications as indicating that “we have a lot of work to do to rebuild trust” among investors, who “expect more than what the regulators require” in allowing people in the financial services industry to work with end clients. What those clients want are “real certifications with ongoing, rigorous” education and a strong disciplinary process.

See also:

Survey: Most financial professionals don’t use robo-advisors

Your answer to the fees question

Here’s how robots might impact 20 jobs in the (near) future


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.