The disconnect between investors and advisors

The desire to maximize returns and control emotional decisions differ

Steve Wendel 18 March, 2019 | 2:00PM
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If you were to list the characteristics of an advisor you'd find most valuable, what would be at the top of your list? I bet it would be things like helping you reach your goals, having the appropriate skills and knowledge for the job, and communicating well. At least, those were the characteristics that scored highest on a recent study our team conducted. You personally might have different priorities--nothing wrong with that--but these three would be a good guess for an average investor.

The question of what investors value is interesting in its own right. This study also looked at two more questions: Do advisors correctly understand what investors are looking for, and how do the perceptions of advisors and investors line up with research studies about the value of advice? In both cases, there's a pretty significant disconnect. To better understand that, let's learn more about the study (which you can find here if you'd like to dig into the details).

About the Study
In this study, Sam Lamas, Ryan Murphy, and Ray Sin surveyed investors to ask them a simple question: What do you value most when selecting a financial advisor? And, similarly, they asked advisors: What do you think investors value most when working with a financial advisor? Each group was presented with a list of 15 options to rank (for comparability) that covered the major attributes: from knowledge and skills to maximizing returns, giving unbiased advice, or using up-to-date technology. The participants ranked each of the options, from first to 15th.

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About Author

Steve Wendel

Steve Wendel  Steve Wendel is head of behavioral science for Morningstar, where he leads a team of behavioral scientists and practitioners who conduct original research to help people invest and manage their money more effectively.

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