SIFMA is the Securities Industry and Financial Markets Association and they recently put together a report entitled, “Individual Investor Use of Financial Advisors”.
Along with the report, SIFMA produced a podcast.
The podcast had on: Scott Smith, Director of Advice Relationships at Cerulli Associates: Ken Cella, Board-level Private Client/Wealth Management Subcommittee Chair Ken, Scott Smith, Director of Advice Relationships at Cerulli Associates, and Ken Bentsen, SIFMA’s president and CEO.
SIFMA defined an “individual investor” as an investor holding between $100,000 and $1,000,000 in the market for the report.
Smith said that this class represents thirty-three million households, or 26% of the US population which holds $6.5 trillion in securities.
He said that seventy-eight percent of these individuals use a financial advisor.
“It really is that relationship between that investor and their financial advisor that is so core to the service and the advice that the financial advisor provides. Today, more than ever. That relationship has always been important but when you’re navigating uncertain times it really is important. I think we saw that in the data,” Cerulli said.
The research also found that largely individual investors are satisfied with their advisor.
The research found that 74% report that they would recommend their advisor, 77% believe their advisor is worth the cost. The research also found that 38% of investors believed they would need more advice in the future.
Cella said financial advisors remain best suited to help investors achieve long-term goals, particularly retirement planning.
“Financial advisors play an essential role,” Cella said on the podcast, “in helping Americans reach their long-term financial goals.
“The data confirmed this, showing that individual investors named retirement planning as the primary service they receive from their financial advisor, followed by protecting their current level of wealth.
“Individual investors also reported receiving approximately half of their retirement income from investments, and those already retired rely on such investments for nearly two-thirds of their income.”
Smith noted that investors continue to want human interaction but are also expecting for the advisor leverage technology.
“To start with – the demand for financial advice seems to be continuously trending upward – Highlighted by the data point that 38% of Individual Investors already believe they will need more advice in the future.
“The key point we were able to derive from the data the way we’ll be able to serve this demand is using digital or automated personalized financial planning services as a complement to – not a replacement for – human financial relationships.
“As Ken Cella just mentioned investors prefer human interaction, but a digital experience of some kind is an expectation of the financial advisor relationship. People like the ability to look up their current balances at any time – but also want to have the option to talk through their goals with someone they trust.”
