Emerging Priorities in Financial Advising

Oct  09 
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Richard Keltner  Director, Product Management, Investment Services, Fiserv 

New research highlights the influence of financial advisors on the investing experience

Financial advisory services make a big difference in consumer confidence. Unfortunately, many people aren't using them.

New research from Fiserv shows just 33 percent of consumers are using the services of a professional advisor. More specifically, only 54 percent of those with household incomes above $150,000 access advisory services.

Those who partner with a financial advisor are less concerned about investment risk and worry less about having enough money when they retire, according to Expectations & Experiences: Borrowing and Wealth Management, the most recent consumer trends survey from Fiserv. The survey was conducted by The Harris Poll among more than 3,000 consumers.

Yet we often see people reaching out to an advisor only when things go haywire and they feel the need for help managing their finances. In my experience, most people seek professional financial advice five to 10 years later than they should.

What's stopping them? Fiserv found the biggest obstacles to using a financial advisor are lack of funds to invest (34 percent), not wanting to pay fees (31 percent) and lack of knowledge about how to find an advisor or where to start (24 percent).

Financial advisors must work to differentiate their services and prove their worth. Many people, especially those in emerging households, may have questions about how and when to enlist a financial advisor: What can an advisor do for me that I can't do for myself? Are my finances at a point that I need help? Do I have enough money for an advisor to even care?

Typical advisory service packages have changed dramatically in a very short time. The availability of digital advising platforms has made previous value-adds, including asset allocation and security selection, readily available without an advising relationship.

Delivering new value to investors starts with three priorities:

1. Promoting Financial Wellness

Fostering financial health means incorporating all aspects of household finance into comprehensive, easy-to-follow plans for people of all means and backgrounds. Advisors become financial wellness coaches when they help people spend, save, borrow and plan for the future.

Through account aggregation, advisors can see and evaluate spending and track progress toward retirement and other goals. That kind of accountability and access encourages financial discipline and increases awareness of how current spending affects goals.

Personalized advice and insights are important. But the reality is that only 55 percent of consumers think th'y’re getting the financial advice they need. Closing the gap means promoting financial health, a relatively new value-add that enables advisors to expand their clientele beyond high-net-worth households looking only for retirement advice.

2. Providing Holistic Advice

A holistic approach to financial planning transcends discussions about retirement to consider every aspect of clients’ lives. When do they want to buy a house? Do they expect to have children? What debts do they have? And how do those factors and decisions influence when they can retire?

Effective advising is about helping investors prioritize multiple goals and understand the tradeoffs involved in major purchases – or even discretionary day-to-day spending. When people work with a financial advisor, they can track their progress toward major purchases and see how major financial decisions may postpone other goals, including retirement.

Thirty-one percent of those who invest their own money are saving for something other than retirement, such as travel (40 percent), a new primary residence (25 percent) or college tuition (24 percent). Advisors can keep investors motivated and engaged by helping clients set and achieve smaller financial goals, which may also boost their confidence in the process.

If Amazon can remind consumers when they're running low on paper towels, shouldn't their financial advisors know how close they are to being able to buy a house or a new car? 

3. Meeting New Consumer Expectations

Today's consumers – especially younger ones – have high expectations. They want experiences tailored to their specific needs and requirements. If Amazon can remind consumers when they're running low on paper towels, shouldn't their financial advisors know how close they are to being able to buy a house or a new car?

Technology provides an accessible entry point to financial advice for nearly all income brackets and has strong potential for adding value to the advising relationship. Using digital tools and services provided by an advisor, investors can quickly and easily track progress toward their financial goals. That kind of engagement is becoming a primary focus for our industry.

New Opportunities in Wealth Management

People want help with their finances. Fiserv found 78 percent of all consumers say a formal financial plan is important to meeting goals. Among those who don't currently work with an advisor, nearly one in four (22 percent) are interested in doing so.

Technology enables delivery of a scalable yet personalized advising experience. The right advice – through the right technology – can help financial advisors differentiate their services and add value to the investing relationship.

The old models of asset allocation and security selection are giving way to holistic wealth management. That approach not only provides valuable, accessible services to investors but also serves as a catalyst to success for advisory practices, opening new opportunities to meet the needs of the next generation of investors.

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Expectations & Experiences: Borrowing and Wealth Management

How do people plan for life’s most important milestones? Insights from our quarterly consumer research

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