What characteristics do clients value most in their financial advisors? Topping the list are soft skills — ironically, often routinely dismissed by advisors as nice-but-not-necessary. A Massachusetts Institute of Technology AgeLab study in 2015 revealed these findings, and they’ve never been more relevant than today, as John Diehl, senior vice president of strategic marketing, Hartford Funds, which sponsored the study, argues in an interview with ThinkAdvisor.
Analyzed were nearly 500 financial advisor reviews on the popular websites Yelp and Angie’s List.
Given the rise of automated digital advice, “our white paper is more timely than ever for advisors seeking to develop relationships — clients want to talk with someone, and robo-advisors can’t provide the personalized, thoughtful guidance that a human can,” Diehl stresses.
In the interview, he discusses the Top 3 of 7 advisor characteristics that clients commented on in the study, dubbed “In Their Own Words: What Social Media Reviews Reveal About Client Perceptions of Financial Advisor Value.”
What Your Peers Are Reading
Return on investment was least mentioned since that aspect of the FA-client relationship is simply expected of an advisor, Diehl says.
Considering that social media is cluttered with more condemnation than kudos, it’s somewhat surprising that the reviews were “overwhelmingly positive” for all seven advisor characteristics, MIT AgeLab noted. They are, in alphabetical order: Education, Effectiveness, Empathy, Expertise, Personalization, Retail Experience and Trust.
Personalization — tailoring a financial plan specifically to client needs — was discussed positively 185 times. But effectiveness — concerning actual investment returns — only 67 times.
MIT AgeLab concluded: “It is the advisor’s simultaneous orchestration of multiple ‘soft’ and interpersonal skills, together with … traditional ‘hard’ expertise and capacity to deliver return on investment that provides the foundations of client value.”
Diehl, who oversees Hartford’s ongoing relationship with the AgeLab team — whose mission is to translate technologies into practical solutions to improve the lives of people ages 45 and older — educates FAs about emerging opportunities related to retirement-income planning and lifestyle changes, among other tactical strategies. Such guidance is often based on conversion of MIT’s research into teaching materials.
Last summer Hartford, which offers mutual funds, ETFs and 529 plans, held its third annual online video series of advisor practice management lessons. The first episode was “Retirement Under Trump.” Explored were “alternative facts” and investing, along with the top three reasons clients are prone to believing that President Donald Trump’s attention-grabbing tweets impact the market.
ThinkAdvisor recently interviewed Diehl, on the phone from Hartford headquarters in Wayne, Pennsylvania. A certified financial planner who also holds the chartered financial consultant and chartered life underwriter designations, he has been with the firm since 1988. Here are highlights of our conversation:
THINKADVISOR: What are the Top 3 most valued advisor characteristics in MIT AgeLab’s social media study?
JOHN DIEHL: Personalization: “My advisor knows me and understands my situation and how I feel about things.” That helps advisors customize investment recommendations. Empathy: “My advisor always takes time to listen.” Risk tolerance and investment objectives, of course, vary.
What’s the significance of those perceptions?
We live in an era where technology cannot replace a human connection.
And the third top characteristic?
Expertise: “My advisor has a mastery of finance and is up to date on changes in the economy.” Number 4 was retail experience: “How do I feel when I visit my advisor? What’s the meeting place like? Is it easy to access? Is it stressful, or does it alleviate my anxiety?”
What characteristics were most commented on after those four?
Trust: The client feels they can rely on their advisor to make decisions that are in their best interest: He or she is honest, frank, straightforward. That’s something clients expect — if it weren’t there, they wouldn’t have a relationship with the advisor at all. So they tend not to comment on trust as much.
What was next in importance?
Education: “My advisor takes the time to teach me about investing and explain options to help me make better investment decisions.”
And the least commented-on characteristic?