To Many Investors, All Advisors Sound the Same: Study

Many financial advisors are facing two problems that they may not even be aware of: They fail to make themselves stand out from the field in the eyes of investors, and they also “often overlook conversations about the financial topics investors care about most.” That’s according to a new study of financial advisor value propositions from BNY Mellon’s Pershing that examines whether advisors’ offerings meet investors’ expectations. One statistic that ought to worry advisors is that more than 60% of investors think all advisors make the same promises — so if they don’t make themselves stand out from the crowd, the investor certainly won’t be doing it for them. So the need to create a value proposition is vital, yet many advisors simply don’t know how. Among the value propositions that do exist, firms talk more about themselves than about their clients, using similar terms — the study points to “comprehensive portfolio management” as “the most popular theme” — and fail to point out how what they do actually relates to satisfying client wants and needs. They also stick largely to the same ideas, with just a few at the top trying new themes and ideas or mentioning client benefits that hitherto haven’t gotten much attention — at least in their materials. Firms also fail to promote their value propositions on social media, the study found, thus missing opportunities particularly with younger investors. And while investors are looking for three main benefits — solutions tailored to their own unique needs, a fiduciary duty to work in the client’s interests and a commitment to trust, integrity and accountability — they don’t necessarily see them, or don’t see them related in a way that makes them stand out. The study also points out that messages have to be tailored to a firm’s target demographic so that it actually appeals to the group the firm is trying to reach. That means paying attention to levels of wealth and generational differences, as well as to other particular traits and distinguishing characteristics of a firm’s target market.