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October 25, 2023 at 03:21 PM
New behavioral research released Wednesday by Morningstar identifies certain advisor behaviors that may unintentionally damage the advisor-client relationship. Actions by advisors that irk clients can erode trust and rapport over time between the two parties.
For its research, Morningstar surveyed 3,993 investors via the online Prolific platform. It studied 15 common advisor behaviors with the potential to annoy clients.
The study found that clients disliked seven of these behaviors. Clients who experienced them reported less willingness to trust and collaborate with their advisor, assign assets for management and recommend the advisor to friends or family. These clients were more likely to leave their advisors, Morningstar reported.
Investors’ financial literacy influenced their dislike for common advisor mistakes. The research showed that the more financially literate investors were, the more they reported disliking each of the advisor’s faux pas. The more financially literate also reported a greater negative effect of these behaviors on their relationship with their advisor.
On a more positive note, investors largely reported fewer negative emotions toward behaviors when they interacted more frequently with their advisor. The more they interacted, the smaller the negative effect on their advisor relationship.
In other good news, eight of the 15 behaviors in the study had a neutral or positive effect on the advisor-client relationship.
See the gallery for seven advisor actions that clients reported disliking, in order from least to most disliked.
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