Prospects Value Surprising Criteria in Advisor Selection
Presence online and in social media is a big driver clients consider when selecting their advisor, according to a recent survey.
The survey breaks down respondents into two categories: traditionalists, who are optimistic about the future of markets and comfortable with the "buy and hold" strategy but more guarded about sharing personal information; and trailblazers, who are pessimistic about the future of markets, looking for holistic advice and more transparent about their finances.
Just over half (55%) of survey respondents were traditionalists whereas 45% were trailblazers.
Over half of the traditionalists (53%) ranked an advisory firm’s characteristics as their top selection criteria, whereas technology was the biggest reason of choice for more than a third of trailblazers (37%).
And, perhaps surprisingly, traditionalists weren’t necessarily older nor trailblazers younger, says Katherine Mauzy, principal for financial advisor talent acquisition at Edward Jones, which conducted the research with the Wall Street Journal.
“I think what you’re seeing is that there’s some baby boomers who are really leaning into technology and are valuing a digital presence and efficiency that comes with a digital presence. And then you’re seeing some, maybe women and millennials who look at things differently,” says Mauzy.
Drilling down further, new media presence (28%) was the biggest driver among advisory firm characteristics that drew prospective traditionalist clients — it even outranked the size and heritage of a firm.
For trailblazer clients, the firm’s social mission statement (25%) and social media presence (23%) were the key characteristics driving selection.
That brings out a key practice management lesson.
“It’s important that FAs, in my opinion, align themselves with an appropriate firm that has high integrity, but at the same time they build their own personal brand — their own credentials, how do they represent themselves — so that they would be referred,” says Mauzy.
Other experts agree, though not entirely.
“It really depends on who you are. If you’re an advisor in an independent channel, or an independent broker-dealer rep, it’s all about you,” says Timothy Welsh, president of San Francisco-based consulting firm Nexus Strategy. “If the companies have invested in their brand, then they want to leverage it, they want their advisors to use it.”
Welsh goes on to say that for advisors looking at prospective clients, social media presence is critical.
“If you have a prospect that you don’t know yet — and they haven’t been referred to you, or they are researching you — the first thing people do is a Google search and what pops up? Other websites and Twitter profiles and LinkedIn,” says Welsh. “If you have an existing client already, I don’t think they want you to follow them on Facebook, but for prospects and new business, absolutely number one priority.”
Mauzy says the biggest takeaway from the Edward Jones research has been the way prospective clients view fees charged by advisors.
About 28% of traditionalist respondents in the survey said fees were a factor in their selection of an advisory firm, while only 12% of trailblazers said the same.
Within this subset, more than half (52%) of the trailblazers cared about transaction fees and commissions, compared to 35% of the trailblazers. Almost a third (30%) of trailblazers considered hourly/service fees a factor in FA selection compared with 21% of traditionalists.
“There are a lot of investors out there that value financial advisor advice and guidance. When you look at both the trailblazers and the traditionalists, there was a value placed on getting that holistic advice,” says Mauzy. “If there’s value, they’re willing to pay the fee.”
The survey polled 1,000 adults across the country in the first quarter of this year.