“This report should be a cause for optimism for financial professionals,” said Wayne Badorf, head of intermediary distribution at Wells Fargo Asset Management.

Todd Crawley: The results of the 2019 Wells Fargo/Gallup Investor and Retirement Optimism Index survey are in and they should be cause for optimism for financial advisors, but, there’s still work to do.


Wayne Badorf: We’ll explain why, and, what it means in terms of means in terms of client acquisition, client service, and professional development. I’m Wayne Badorf.


Todd: And I’m Todd Crawley. This is The Essential Practice podcast.


Despite increasing automation in nearly all aspects of the consumer experience, 84% of investors say that financial advisors will always be needed and will not be replaced by automated investing technology—that’s according to the first quarter 2019 Wells Fargo/Gallup Investor and Retirement Optimism Index survey.


Wayne: Right, and people—even young people—want that human touch when planning their financial futures, but they want advisors who use technology.


Todd: Yeah.


Wayne: See, it’s not an either/or scenario. In fact, 39% of people who use an advisor want to meet with him or her as much as three times a year. That is the cause for optimism.


Todd: Hey Wayne, talk a bit about this survey.


Wayne: Sure.


Todd: A lot of companies conduct surveys.


Wayne: Right, and Wells Fargo has been working with Gallup in doing this survey over the span of 10 years. And one of the things that allowed us to do this past quarter has been to allow us to add some questions that dealt with what investors are looking for in a relationship with a financial advisor. And it is great optimism from that standpoint of [investors] really do want to work with advisors. But I think that there’s some application for the advisor to recognize how they might need to evolve over time.


Todd: Let’s go through the survey results by the numbers.


Wayne: Okay.


Todd: A large number of respondents in the survey said they’re already working with an advisor, but 22% said they aren’t and would like to. Therein is the opportunity for advisors who want to step up their client acquisition game.


Wayne: So the real question, then, for a financial advisor is: How do you connect the people who are underserved in the marketplace—meaning, they don’t have that relationship with a financial advisor—to you, having competency and expertise to help them?

And I think that one of the things that that begets, for the financial advisor to think about, is: What is their strategy in the marketplace to communicate their value? That could be how they talk to their clients about their value proposition that they believe that they inherently possess and want their client to talk to others about. It could be their social media platforms and what they are communicating on those platforms that allow people to engage and understand more about what they do. And then it can be about the activity they have inside their community to get the message out about who they are as a financial advisor and their practice.


Todd: Another data point indicates that 68% of respondents want a collaborative relationship. But the question is: How do investors want to be collaborated with?


Wayne: Todd, you raise a really good question in talking about the relationship that investors are telling us they want to have with their financial advisor. In fact, we asked them the question specifically: Which of the following comes closest to the role you want your financial advisor to play with your investments? And they were given three choices:

  • the advisor provides you advice, but you handle your investments on your own,
  • the advisor handles your investments in close contact with you, and
  • the advisor handles your investments for you and you have little involvement.

And as you articulated, 68% of our respondents answered the second as their preference, which is your advisor handles your investments in close consultation with you.

So, collaboration, as I think about collaboration, is really that the client says, “First, I want you to engage with me, I want you to understand my complete financial picture, understand my situation, what I’m trying to accomplish, and let’s work together to solve [my financial needs].” Not, “let me just hand it all over to you” and not “just tell me and I’ll take it away and implement [the plan],” but, “let’s work together.”

And we saw it when we did a survey in 2017 geared toward the millennial population, we saw a similar reaction from the millennial generation that said, “I want to work with the financial advisor—together—toward my goals and my objectives.


Todd: This study asked a cross-section of age groups. What’s the takeaway for client service?


Wayne: Even when we look across different age bands—and we did that in this survey—we can look at 18- to 49-year-olds, 50- to 64-year-olds, and 65-years-plus, we see the importance of this collaborative relationship coming across all of these age bands. It was 74% of 18- to 49-year-olds, 64% for 50- to 64-year-olds, and 67% for those 65-years-plus.

So the idea of having a collaborative relationship extends across the generations. It’s not just a millennial thing. And I think part of that is, when we talk about making decisions with someone’s finances, those are very personal things and perhaps it’s the investor saying, “I want to talk to somebody. I want to work with somebody, but I’m not comfortable handing it all over, and I’m not quite comfortable doing it on my own.”


Todd: The last insight we’re covering today is on professional development. And the data point we’re pointing at in the survey is that 46% of respondents said they wanted a second opinion in terms of their financial advice. Let’s start with the advisor whose clients are seeking a second opinion.


Wayne: First and foremost, I would say that if I am a financial advisor, that I would expect that, at any point, what I share with a client in terms of my recommendations that they may be shared with other members of their family, or with another expert. And so I really need to make sure that I’ve taken the time, consideration, and care into that recommendation.

I think, that the clients want a collaborative relationship, and together with the client, they are decoding the best path. When the client does seek a second opinion, they can express how they were part of why they chose what they chose, and they’re now just wanting an expert to confirm [the plan]. And, to perhaps ask, “Is there anything we didn’t think about that we should have thought about, anything you think we missed in the equation?” But, when you involve them in the process, when you have that collaborative relationship, then they are able to articulate to that other expert why you chose [the plan you had]. And perhaps is just more about—did we miss anything?


Todd: And what’s this mean for advisors who need to prepare for the unexpected—but certainly welcomed—client seeking that second opinion?


Wayne: I think on the flip-side, it could also be an opportunity for you to talk about what your process is, how you go about working with clients in a collaborative manner, to really address their goals and help them make decisions.


Todd: You know Wayne, the key takeaway is that there’s great insight to be learned just by asking questions.


Wayne: You know, Todd, I think you’re spot on. Asking questions is so important. What we also learned in the survey is that investors want the conversation to evolve. No longer do they want the advisor just focused on investments—that’s certainly an important part. But clients want advisors focused on retirement strategy, they want them focused on broader financial planning, and some want them focused on financial coaching to help them reach their goals. So I think one of the best ways is, really, for the advisor to expand the conversation, perhaps use this as an opportunity where they can survey their clients, to really ask them, what do they want out of the relationship? They might have started working with this advisor years ago. And so, for the advisor to remain relevant, [he or she] needs to evolve with their clients. And as the clients’ needs change over time, so should the advisor’s ability to serve those needs.


Todd: Let’s wrap up this episode on that note. As always, contact your regional partner for more insight, service, and support—all that good stuff—at 888-877-9275. And until next time, I’m Todd Crawley.


Wayne: And I’m Wayne Badorf. Thanks for listening to The Essential Practice podcast.


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