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Advisor-Investor Survey Reveals Top Concerns, Priorities

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Investors and their advisors see eye to eye on several things: managing volatility, protecting assets and saving for retirement.

However, advisors may underestimate their clients’ concerns about healthcare costs and taxes, according to Jefferson National’s second annual Advisor Authority study, released Monday. Investors also revealed their three main priorities when choosing an advisor.

Investors focused on preserving their wealth and other factors that immediately affected their bottom line, the study found. Thirty percent cited both protecting assets and cost of healthcare, 29% saving enough for retirement second and 26% taxes third.

Harris Poll conducted the online survey in the U.S. in March among the 683 financial advisors, 440 of whom were independent RIAs and 243 broker/dealers, and 733 investors, ranging from mass affluent to ultra-high net worth.

Findings Highlighted

The new study included a 360-degree view on volatility—its causes, its effect and defensive measures to protect against it.

It found that 76% of advisors and 63% or investors said volatility would rise over the next 12 months.

Both groups agreed that the top causes of volatility were the U.S. presidential election, energy prices, U.S. Fed policy and instability in China.

Sixty-two percent of advisors indicated they were likely to revise their investing strategy in response, but just 41% of investors who felt pressure to take action.

Seventy-five percent of advisors and 72% of investors who said they would revise their strategy planned to invest more tactically, and 69% of both groups planned to invest more conservatively.

In order to attract the next generation of investors, 36% of advisors said they were working more closely with a client’s family and children.

The same percentage said they were increasing use of innovative techniques such as social media, 26% were using mobile technology and 24% were offering personalized holistic advice.

According to the survey, advisors who earned more and had more assets under management targeted younger prospects, and were likelier to invest in strategies to attract the next generation and hold on to the heirs of current clients.

Investors set greater store by technology, such as website enhancements, leveraging robo advice, robust cyber security and mobile access.

Jefferson National said this aligned with last year’s study, which showed that the most successful advisors used more technology, and were likelier to adopt and use robo with affluent clients.

Seventy-seven percent of RIAs and fee-based advisors said they discussed fees with their clients, and would not make an investment unless they could effectively communicate the strategy to clients, or knew that their clients understood the investment.

Sixty-five percent said they discussed taxes with their clients in some way.

Investors’ outlook for 2016 was generally apprehensive, but 47% of those who worked with advisors expressed optimism, compared with only 35% who did not use an advisor.

Why an Investor Chooses an Advisor

Investors had three main priorities when choosing an advisor:

  1. Experience (46%)
  2. Personalized holistic advice (26%)
  3. A fiduciary standard (24%)

Other factors were much less important, according to the survey.

“As our study reveals, investors care about the issues of transparency and fees, so if an advisor does not put their clients’ best interests first, clients will find someone who does,” Jefferson National president Laurence Greenberg said in a statement.

“The future is fee-based and nothing can replace holistic, unbiased and guided advice—a commitment that RIAs have been making from day one.”

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