3 min read
How to Navigate the Advisor-Client Relationship Lifecycle
The shift to human-centric advice may require advisors to adapt their practices.
Key Takeaways
Given the fundamental shift to the human side of investing, it’s more important than ever for advisors to have a clear sense of what investors value in the advisor-client relationship throughout the client lifecycle.
Advisors must meet both financial and emotional needs of clients to grow their business, nourish existing connections, and revive struggling advisor-client relationships.
Morningstar’s Advisor Workstation can help empower advisors to build trust and showcase their value.
Investors’ expectations for financial advisors are evolving. Previously, clients mostly focused on the functional value that an advisor provided. But now, advisors are being pushed to deliver emotional value as well—thus expanding their role to one of a behavioral coach, financial expert, and advocate.
As such, advisors must be able to uncover who an investor is as a person and tailor their offers accordingly. That means identifying investors’ financial wants and needs along with helping them connect their decisions to long-term life goals. To understand how advisors can improve their businesses, our Morningstar researchers take a closer look at why clients hire a financial advisor, keep a financial advisor, and stop working with an advisor.
We examine all three stages in the client lifecycle—and offer actionable tips on how you can attract new clients, maintain strong connections, and revive struggling relationships.
To read the full research report, download a copy.
Grow Your Business
While a substantial portion of investors hire an advisor to address a specific financial need, our study finds that most reasons cited emotional drivers. That discovery may not be surprising: At this early stage of the client lifecycle, people value an advisor who can address their unease about making financial decisions, help them stay on track during market volatility, and truly understand them as a person.
What can advisors do? To get hired, it’s important to highlight the emotional support and guidance that you can offer to prospective clients. If possible, demonstrate you understand the deeper “why” behind clients’ goals and share examples from how previous clients have found better peace of mind working with you.
The investment planning experience within Advisor Workstation allows you to provide goal-oriented advice by building proposals and portfolios that fit client risk tolerances, preferences, and goals. Our end-to-end solution also offers profiling tools that can drive deeper conversations and enhance client collaboration.
Four out of the five most common reasons for hiring a financial advisor cited are emotional drivers.
Nourish Existing Relationships
Investors are continuing to work with their advisors for reasons beyond returns. In fact, we find that clients stay in these relationships because their emotional concerns about their finances are being met.
Given this discovery, advisors must cultivate comfort to ensure that clients feel supported. In a sense, advisors can act as a buffer from the overwhelming world of finance. Advisors may also be a voice of reason for investors and help them overcome the otherwise debilitating complexity that can emerge when making long-term financial plans.
What can advisors do? To earn your keep, you must address both the emotional and financial needs of clients. By asking the right questions, advisors can foster trust and reassure clients that their goals will be met.
Morningstar Advisor Workstation can help you deliver FINRA-reviewed reports that make it easier to show your ability to meet clients’ specific expectations and help manage their emotions around investment decisions.
The most common reason for keeping a financial advisor was an investor’s discomfort in handling finances.
Revive Struggling Relationships
It’s clear financial issues matter—quality of advice, cost of services, and returns seem to dominate firing decisions. However, these responses also touched on more emotional issues.
For example, reasons pertaining to quality of advice often stemmed from an advisor not dedicating enough time to understand a client’s financial goals and, as a result, not recognizing the client’s need for a particular service. Investors who referred to cost often mentioned that the value the advisor provided did not warrant the cost, not that the services themselves were too expensive. Lastly, issues related to returns seem to stem from mismatched expectations due to an advisor not adequately preparing clients for the inherent ups and downs of investing.
What can advisors do? To not get fired, make sure to effectively communicate and demonstrate your ability to provide personalized advice. In other words, regularly check in with clients regarding their goals and reach out to them proactively to stay top of mind.
Morningstar for Advisors mobile app, the companion app for Advisor Workstation, helps streamline client communication. The app captures sensitive documents with client consent and allows you to show the value of your advice with custom reports, data points, and analytics to prove every point.
The most common reason for firing a financial advisor was the quality of advice that a client received.
Build Long-Lasting Client Relationships
The shift to human-centric advice may require advisors to adapt their practices. Still, advisors are more positioned than ever to address clients’ desire to have personalized advice, feel peace of mind with their finances, and receive help avoiding behavioral pitfalls.
Morningstar’s Advisor Workstation empowers advisors to build trust, showcase their value, and deliver great advice. From accessing research tools to managing portfolios, the all-in-one platform allows you to optimize your workflows and meet the evolving needs of clients.