In November 2018, The Financial Times conducted a survey of readers who currently use a financial adviser, aiming to establish what qualities investors looked for in their financial advisers.
Most respondents said they wanted the three T’s – Transparency, Trust and Tailored advice.
7% of Investors admitted they did not know how much they were paying and would like to know in actual cash terms and also how those charges are calculated. They expressed a preference for a fixed fee rather than an ‘ad valorem’ fee – a percentage of the assets being invested.
Investors prefer to deal with an adviser offering advice based on products available in the whole of the market rather than an adviser who is tied or restricted. About one third of respondents said they did not know if their adviser was restricted.
Trusting their adviser was the most frequently mentioned term, but “clarity, creativity in their thinking, honesty, independence and being a good listener” were all qualities that readers named in their longer answers as adding value.Other readers stressed they wanted an adviser who understood their individual goals and circumstances and provided “personal, individual, thoughtful advice”. Some wanted this to go beyond investment advice and wished to “talk philanthropy, business and raising rich children” with their adviser to achieve “life objectives as well as financial ones”.
38% of investors were ‘very satisfied’ with their adviser; 41% were ‘satisfied’ and 13% felt they were ‘not getting good value’.
Investors who are satisfied with their advisor are very likely to recommend them to others. 33% of those surveyed said their advisor was chosen because of a word-of-mouth recommendation from a friend. 25% said it was because of a recommendation from a family member, work colleague or other professional adviser such as an accountant.
Building trust with an adviser goes hand in hand with investors’ overwhelming preference for receiving face-to face advice.
The top 10 topics investors’ raised with their advisers were:
- Pension/retirement plans
- Tax planning
- Recent market volatility
- Investment returns/growth
- Am I doing the right thing?
- Financial planning
- Inheritance Tax
- Risk mitigation/capital preservation