While the majority of high-net-worth (HNW) clients are satisfied with their advisors, a report from the Investments & Wealth Institute finds many advisors could be doing more for affluent investors.
In its Canadian High-Net-Worth Investor Research 2019 report, the Investments & Wealth Institute polled 425 Canadians with at least $500,000 in investable assets about their experiences with their advisors.
Eighty per cent of respondents said they were somewhat or very satisfied with their advisors, and 81% said they were somewhat or extremely likely to continue working with them. Yet, HNW clients gave the advisory industry a “relatively low” Net Promoter Score of 15, calculated as the percentage of respondents identified as promoters of the industry (39%) less those identified as detractors (24%).
“There is a clear opportunity for advisors to hold themselves to a higher standard in order to do the best possible work for their clients and to stand out in a competitive marketplace,” the report said.
To determine what sets an exceptional advisor apart from a satisfactory one, the report used a proprietary algorithm to measure client engagement. It noted that 91% of engaged clients felt their advisors were knowledgeable, compared to 53% of other clients. Similarly, 74% of engaged clients felt their advisors had strong technical expertise, compared to 42% of other clients.
Engaged clients placed a higher importance on advanced certifications, with 70% saying it was important that their advisors have them, and 75% saying designations and certifications would be a factor they’d consider if they were choosing an advisor today.
The report also found that exceptional advisors were more likely to offer a personalized client approach. Eight-five per cent of engaged HNW clients said their advisors fully understood their life goals, and 83% said their advisors fully understood their financial goals, compared to 42% and 48% of clients who weren’t engaged, respectively.
Exceptional advisors were more likely to offer exceptional service, as well. Seventy-five per cent of engaged clients said they got significant value from review meetings with their advisors, compared to 34% of those who weren’t engaged. Engaged clients were also more likely to feel completely engaged during the review process (81%, compared to 44%) and to say that their spouses/partners were completely engaged (78%, compared to 33%).
“The path from good to exceptional is not easy but it is clear,” the report concluded. “Advisors who want to do more and be more for their clients have an opportunity to stand out.”