‘Advice’ is changing due to client awareness of fees

Three-quarters of advisers in a new Cerulli Associates study agree or strongly agree that, compared with five years ago, prospective clients are now more sensitive about fee levels.

As of last year’s second quarter, 53% of investors agree that they are willing to pay for advice regarding their financial investments, representing a 15-percentage-point increase from 2009, when only 38% of investors expressed such willingness.

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The percentage of investors who believe that their advice is either free or are unsure how they pay for advice has fallen from 65% in 2011 to 42% in 2018, Cerulli said in a release.

“While clients understand that advice comes at a cost and many believe it is worth its expense, if the cost-benefit of engaging with an adviser is not clear, they are more likely to opt for other providers,” said Marina Shtyrkov, a research analyst at the Boston-based firm.

“Although acumen and investment performance are valuable, practices that emphasize only these elements may be misaligned with the true drivers of investor satisfaction,” Ms. Shtyrkov said.

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According to the majority of retail investors, transparency (73%), understanding of needs and goals (67%), and promptness of requested follow-ups (66%) are paramount to advisory relationship satisfaction.

But of advisers surveyed, only 30% strongly agree that their practice goes above and beyond to make clients feel special, and that it has a repeatable, consistent client experience.