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What Clients Want, and What Advisors Think They Want

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If financial advisors want to act in the best interest of their clients, they first need to know what those interests are, but that’s not necessarily what happens. A new survey from Investing Media Solutions reveals several disconnects between what advisors think are the primary concerns and goals of their clients and what their clients actually believe.

For example, the number one investment priority for 74% of asset managers surveyed — roughly three-quarters are financial advisors; the rest work in insurance, institutional investing or commercial banking — is wealth preservation and risk management, but for their clients it’s growth (a priority for 54% of the affluent investors surveyed).

Only 51% of affluent investors said wealth preservation and risk management was their main investing objective.

“Advisors need to listen better to know how their clients are prioritizing objectives. … If they’re going to win over new clients maybe the message is they can’t be too conservative in their approach,” said Jeff Tripp, a partner at IMS.

The survey was completed by 5,865 individuals — split almost evenly between those working in financial services and affluent investors.

Another interesting disconnect revealed in the study concerned robo-advisors. About half of retail investors surveyed were aware of the term robo-advisor, up from 16% a year ago, and about 18% of them said they were considering adding a robo account by the end of this year, up from 13% in the fourth quarter of 2016, while 82% had no plans to do so.

In contrast, only 11% of advisors thought their clients were using a robo or interested in adding one to their account and 68% thought their clients weren’t doing either.  Most surprising, said Tripp, approximately 21% didn’t know their clients’ use or views on robos. “How can they not know?” said Tripp. “They haven’t asked.”

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Another disconnect between advisors and clients: the issues they’re most concerned about. Sixty-two percent of advisors were most concerned about interest rates while only 29% of investors were, and 46% of advisors were concerned about U.S. economic growth, almost double the percentage of investors.

One concern that both groups shared almost equally: Trump administration policies and Cabinet choices. Fifty-one percent of advisors had that concern while 44% of investors did. But at the same time, both groups were similarly optimistic about the potential economic impact of the administration’s tax cut and fiscal stimulus plans (69% of advisors and 61% of investors expect a positive impact).

That disconnect implies a “lack of confidence that Trump will be able to make those policies happen,” said Tripp. “The failure of the health care plan might be the first shining example of that.”

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