What You Need to Know
- Young investors are showing a high level of interest in forward planning, according to new research by Aon and Money Management Institute
- The value of financial advice has increased for 52% of investors since the pandemic.
- Clients are more likely to recommend an advisor who talks to them about values, the study finds.
The pandemic has underscored the importance of and demand for financial advice. Financial planning offers clients of all generations and life stages the opportunity to take stock and recalibrate their affairs.
New research conducted by Aon and Money Management Institute (MMI) finds that the proportion of clients with discretionary or advisory mandates who say they have had a financial planning discussion or annual portfolio review has remained consistent since 2019. Yet, the value of financial advice has increased for 52% of investors since the pandemic.
Sixty-two percent of investors report that they have had a review session with their advisor, and 43% say they have discussed financial planning.
The findings are based on a survey Aon and MMI conducted with 1,500 investors and 1,405 financial advisors. The report is the first a four-part series that explores both investor and advisor views of the value of investment advice and how it is delivered.
A client’s age and life stage can influence both when advice is sought and the nature of the client’s goals. The research finds that about half of investors 55 and younger have had a financial planning conversation in the last 12 months, somewhat more than their older ones. This includes 23% of investors under the age of 45 who were putting a financial plan in place for the very first time.
High-Quality Financial Plan
According to the report, younger investors who came of age during the 2008 financial crisis and now have to confront the effects of the pandemic recognize the importance of fiscal responsibility and are showing a high level of interest in forward planning. Clients over 55 are likelier to have regular portfolio evaluations; nearly three-quarters say they had an annual review in the past year.
The report says this may indicate that younger clients are more actively updating their strategy and progress toward goals, while older clients may have financial plans in place they only periodically review.
The survey findings show that delivering a financial plan that effectively addresses clients’ needs typically leads to higher levels of financial confidence and a better overall experience. Improved satisfaction across these areas can also encourage investors to allocate more assets and a higher share of wallet to their financial advisor or firm.
According to the report, half of clients who gave their firm’s financial planning capabilities high scores reported that as a result of the advice they received, their investment performance exceeded their expectations.
Moreover, they were likelier to feel bullish about future S&P 500 market performance when compared with a neutral or bearish outlook.
The report noted, however, that clients and advisors prioritize different areas of the planning process, making it incumbent on advisors to explore various lifestyle scenarios and milestones in order to deliver a robust and holistic plan.