New Report Finds More Investors Asking About Fees and Holistic Services







Advisors have to become more transparent and offer a more inclusive financial and life plan, while investors say they are willing to pay for advice, as long as it is transparent and shows value.

Those are some of the results in an April 2019 report in The Cerulli Edge—U.S. Asset and Wealth Management Edition. The report also found the following:

• The highest value that retail investors asked of their advisors was transparency (73%), understanding of needs and goals (67%), and promptness of requested follow-ups (66%.)
• Investors are more aware of fees and what they are receiving. Only 42% in 2018 of respondents said they were unaware of the fees being charged compared to 65% in 2011.
• Advisors also said clients were more sensitive about fees. About 75% of advisors agree or strongly agree that prospective clients care more about fees compared to five years ago.
• As of 2Q 2018, 53% of investors said they are willing to pay for advice regarding their financial investments. This is up 15% increase from 2009, when only 38% of investors said they were willing to pay more for advice.
• Cerulli also found that advisors have to become more holistic in their business approach: “To remain competitive, advisors must evolve their definition of advice to include nonfinancial aspects of the client’s life and curate a meaningful experiential process for their clients.”

Wake Up Call For Advisors

The report also said that only 30% of advisors deliver services that make their clients “feel special,” according to Cerulli research analyst Marina Shtyrkov.

“Experience-centric practices exhibit stronger results than their peers across a series of metrics, including a higher median client size, lower asset attrition, a broader service set, and greater likelihood to target affluent clients,” Shtyrkov said. “By outpacing their peers in these categories, experience-centric practices demonstrate that advisors can harness the power of their client experience to increase retention, reduce attrition, and generate a strong referral system.”

One key finding here concerns the holistic approach. As noted in this article, “Time To Think Outside the Box in the Next Generation of  Financial Wellness Programs,” on this site, employee benefits departments are also adopting a “financial wellness” or holistic approach to advising their employees. These services cover health care options, consumer and student debt burdens, mortgage applications, credit repair, improving the work-life balance, Social Security, job advancement, as well as instruction on basic financial literacy.

This holistic approach can certainly be adopted by RIAs who have already adopted the fiduciary approach that includes fee transparency, and fee and expense product sensitivity.

The Cerulli report also addresses what it called the “Mega Effect” of building larger client-focused and digitally savvy teams.  These teams are the core group that “advisors must evolve [to expand] their definition of advice to include nonfinancial aspects of the client’s life and curate a meaningful experience for their clients.” These services in a high-net worth client setting include practices that go “above and beyond to make clients feel special, and that the practice has a repeatable, consistent client experience.”

The report quoted one broker-dealer executive as saying that “the key thing” his firm promotes is “the delivery of advice versus the delivery of solutions.” His firm focuses on how advisors are “helping clients uncover solutions holistically.” He believes that one of the most significant trends affecting the industry is the “shifting dynamic of being paid for advice and the commoditization of the investment solution.”

Implementing Holistic Approaches

The Cerulli report provided some examples of this holistic approach from advisors to their clients. The problem is that the definition of these holistic services are pretty lame compared to what is happening in some employee benefits departments. From the advisor side, some of the examples cited in the Cerulli study  included birthday parties for elderly clients, making bereavement phone calls, sending books to clients who invested in 529 plans, and family summit meeting for family office clients. These are nice social touches, but they should not be confused with the holistic approach being used in some corporations.

The good news is that some intrepid RIAs may be able to learn more from some employee benefits departments. While these corporate and municipal programs work with a different client demographics, incomes and net worths, they address sources of serious financial stress that emanate from inside and outside the work environment that affect all investors in all income brackets.

For example, one of the most inclusive employee wellness programs is offered by Palm Beach (Florida) County in its “Clerks for Wellness” program. According to Darlene Malaney, COO of finance for Palm Beach County, the move from “financial wellness to employee wellbeing” will create a “holistic employee wellbeing initiative” that bridges the gap between financial stress and its impact on physical and emotional health. To do this, the county is working with parties in health care, banking, and retirement plan experts. All this is being done, Malaney said, because the county needs to take actions that serve a “public purpose.”

RIAs can adopt some of the corporate wellness program offerings to promote their services that address sources of financial and social stress outside of the workplace. But to be truly inclusive, realistic and complete, these holistic wellness programs have to address political issues, such as the stability of Social Security, Medicare, wage growth, job security and student loan debt.

While this may be outside the comfort zone of many advisors, the new reality is that these built-in financial safety nets are in danger of being curtailed without any new supports in place. Without these supports, Americans of all income levels will feel their ill-effects and financial stress directly or in their families. This gives the term “holistic” a very new and actionable meaning.


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