How Should Clients Choose a Financial Advisor? It Starts With a Little Help

People have access to a wider range of choices today than perhaps ever before when it comes to selecting a financial advisor. Even before the pandemic normalized the practice of meeting remotely, clients could take their pick from traditional, online-only and even robo-advisors to help them meet their financial goals.

Evidence suggests recent events have increased the demand for financial services. In fact, a 2021 study found that, more than a year into the pandemic, more people reported confidence in the advice from a financial advisor (26%, up from 22% in 2020) than from themselves (20%, down from 30% in 2020).1

That same study reported an increase in Americans working with an advisor, with 38% saying they had an advisor (over 29% the previous year).1

Financial professionals can play an important role in educating prospective clients about their options for services, varying costs and differences in access to investments and products that may help them diversify their portfolios and grow their assets.

Understand Prospects’ Needs to Help Them Choose

Every individual has his or her own reasons for choosing to work with a financial services provider. Advisors with a goal of growing their business in the months and years ahead would do well to understand the wide range of goals clients bring to the table, from wealthy investors to those facing possible retirement savings shortfalls.

For example, while investing and saving for retirement are high on most people’s list of financial priorities, so are paying bills, paying off debts, and taking care of family needs. In fact, paying bills and expenses was the number one priority in 2021.1 

One client may want help setting up a plan to put retirement savings on auto-pilot. Another might be looking for the best way to save for a major milestone, such as a home purchase or college tuition. Helping those clients achieve their immediate goals can help transform them into clients with investable assets in the future.

Make Sure Prospective Clients Know Their Options

Helping clients see the biggest differences between your services and those of, say, a robo-advisor or an online-only service provider can help you manage expectations and set a foundation for a relationship that grows over time. Help your clients understand:

  1. Robo-advisors provide an often low-cost option that can allow investors to start quite small … but for those who need help with financial planning, retirement planning or creating a budget, they may not be the best solution.
  2. Online-only financial services providers often fall somewhere between traditional advisors and robo-options. The client experience may be more like the robo-advisor for investments, with humans available for individual financial planning needs. Investment minimums and fees can span a broad range, so it’s important to read the fine print.
  3. Traditional advisors don’t necessarily have to live nearby, and you can often meet “in person” using online tools.
  4. Some, but not all, traditional advisors have relatively high minimum investment balances. (If you don’t, be sure prospective clients know what you can offer them that another traditional advisor may not.)
  5. The same can be said for fees. Whether your practice is fee-based or otherwise, clients deserve to understand how advisors are paid, and what they can expect to pay for services.
  6. Not all traditional financial advisors have access to the same investment vehicles and products to help diversify portfolios with upside growth potential and downside risk control
  7. For clients who have an interest in adding impact investing to a portfolio (for example, for social or environmental good), a traditional financial advisor can offer individualized attention and an exploration of core values, to help align their financial choices with their personal principles.
  8. Financial advisors can have a very wide range of educational backgrounds, experience and credentials. Be prepared to describe yours, and help your clients understand your education and training in the field.

Annuities: An Overlooked Portfolio Option?

Every client has his or her own reasons for seeking professional financial advice. Those unique client circumstances can also affect their needs and concerns when it comes to retirement planning. Some clients are more concerned about securing guaranteed lifetime income, while others may want to continue growing their wealth or focus on leaving a legacy for loved ones.

Just like you’d dedicate time and effort to differentiating your practice from an online-only financial service or a robo-advisor, reaching out to clients about their goals and expectations is a smart way to build stronger, long-term relationships. Learn more with our guide, 5 Business-Building Opportunities Advisors Miss. Just click the link below to claim your own complimentary copy.



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