Even during the recent tough economic climate, advisors reassured themselves that personal relationships are all that mattered: The large financial services firms were drowning in waves of bad news and unwanted publicity. Yet clients would repeatedly say that while they did not trust the firms, they had plenty of faith in their own advisor, even when that advisor worked for a bad firm.
But a recent survey suggests that the next generation of potential clients will be far stingier in extending that kind of goodwill. In a recent survey of over 1,200 investors with over $500,00 in investable assets, Cisco Internet Business Solutions Group found that younger investors not only lacked trust in financial advisors compared to older investors, they also doubted the overall value of the services these advisors provide, trusted or not.
In the survey, 60% of U.S. investors over 65 trust their advisor’s advice more than they trust advice from other investors; only 29% of U.S. investors under 55 say the same thing.
Additionally, investors under 55 represent a “flight risk” to advisors, Cisco found, reporting that 20% of these investors said they planned to change their primary advisor in the next year, compared to the 5% of investors over 65 who said they were planning to move.
Yet attracting and retaining this hard-to-please segment is a smart strategy for advisors: The under-55 crowd represents an estimated $31 billion opportunity.
Younger investors ranked “more personalized recommendation and advice” and “a broader range of investment options” as two of the highest priorities in an advising strategy, Cisco reported. In fact, more than 57% of investors said they were willing to move assets and switch firms to obtain technology-based services such as video conferencing, important when almost a quarter of clients live more than 50 miles away from their advisor.
Approximately 61% of the investors under 55 surveyed said they wanted the option of having video meetings with advisors. And more than half of younger investors said it would be helpful to see charts, graphs and other information during a video meeting.