In spite of the fact that investors are increasingly turning to robo-advisors, what they want is guidance from financial firms.
Those are the findings of a new study from J.D. Power, which looked at how satisfied investors are with their firms. The J.D. Power 2015 U.S. Self-Directed Investor Satisfaction Study found that self-directed investors both want and expect more from their firms than just low-cost trades, fast and reliable trade execution and access to research.
While investors don't necessarily want a one-on-one advisor relationship all the time, or for an advisor to actually manage their investments for them, they do look for a relationship that offers guidance on how to achieve and track the performance they need to reach the goals they've set for themselves. If they get that out of their relationship with their firm, they're much more likely to recommend it to friends and family — and to trust it with more of their investments.
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Guidance-based relationships that actually work, according to the study, have three essential elements: effective communications; relevant educational resources; and a robust and intuitive suite of digital tools that help investors with financial planning and portfolio management as well as tracking and monitoring investments. If a firm can give all those things to its clients, it stands a better chance of hanging on to them over the long term, particularly in the case of younger investors.
Sixty-six percent of investors say that they're truly do-it-yourselfers who neither want nor seek guidance from an advisor. However, 21 percent want to use an advisor as a sounding board for their strategies — the study terms them "validators" — and 13 percent, the "collaborators," make decisions with the input of an advisor of some kind.
Validators and collaborators make up a larger proportion — 38 percent, in fact — of Gen Y, Gen Z and women investors, so advisors looking to form a relationship with such clients would do well to bear in mind that they're not looking for a completely hands-off approach.
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