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Practice Management > Marketing and Communications > Client Retention

Market Volatility Increases Demand for Financial Planning: Cerulli

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Financial advisors should grab the opportunity to engage clients and gain new ones when markets are volatile, as they are now, by communicating effectively and implementing financial planning software, according to research reported in the latest edition of Cerulli Edge.

Investors experiencing market volatility for the first time are especially keen to receive their advisor’s guidance, Cerulli said.

The study noted that about three-quarters of advisors’ clients receive some form of financial planning. Eighteen percent of investors working with a financial advisor do not have a financial plan in place but consider one important.

Cerulli recommends that advisors consider re-introducing their planning services, particularly during periods of market volatility, as some clients may not be aware of this service offering.

Advisors should also consider developing a communication strategy to attract and retain client relationships. According to the study, some 40% of retail investors deem it extremely important that their advisor engage in an appropriate amount of contact with them.

Cerulli said advisors can do this by distributing timely information about the current market and economic situation and offering their own analysis — which clients are likely to share with their own personal networks.

“A thoughtful stream of touchpoints can buoy client satisfaction even as markets falter, allowing advisors to be best positioned for client retention and growth,” Scott Smith, director of advice relationships at Cerulli Associates, said in a statement.

Scale becomes an important consideration as firms continue to encourage financial planning.

“Well-integrated financial planning solutions can help advisors meet investor demand for bespoke planning services efficiently, which can prove invaluable, especially in times of market volatility,” Smith said.

Cerulli research showed that 74% of advisors use financial planning software within their practice, and by 2023, this number is expected to reach 82% among firms polled.

Ultimately, according to the study, advisors who offer financial planning find that their clients are better positioned to stay the course and remain calm when market performance declines. This, in turn, enables advisors to develop enduring client relationships.

“Financial planning shifts the focus to progress made toward achieving goals rather than investment performance,” Smith said. “This frames volatility in the context of a bigger picture, which helps clients feel prepared when market shocks arise.”


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