How Advisors Can Deliver Personalized Experiences Using Investor Engagement Research

As part of our 2024 Voice of the Investor research program, we created the Investor Engagement Index to track retail investor engagement with their investment portfolio. The index tracked engagement across the following seven components:

• Feeling informed about composition and performance of investments
• Understanding of investment concepts and financial markets
• Frequency of investment goals review
• Alignment of investment strategy to long-term goals
• Frequency of investment portfolio review
• Involvement in investment decision-making
• Frequency of engagement in financial education activities

Advisors can leverage this index by examining the effect of these components across client groups and using these insights to personalize their individual conversations.

For example, working with advisors helped investors gain clarity around their investment strategy and the confidence to act.

Use this infographic to highlight your value proposition during your client conversations.

While advisors (and even clients) may find it intuitive that professional advice can improve investor engagement, our survey results also shed new light on the significance of investor engagement across key areas of client interest.

First, we mapped the Investor Engagement Index against topics like sustainability, artificial intelligence, risk tolerance, and comfort making decisions to see what (if any) differences would emerge. We found that two distinct groups emerged for each topic, with higher investor engagement correlating with:

• Some or full sustainability alignment.
• Higher trust of AI
• Higher risk tolerance
• Higher comfort making investment decisions

Next, we parsed the data further by mapping these categories onto each of the seven components that make up the Investor Engagement Index.

Note: It would be interesting to dive more deeply to surface any other factors at play – for example, the amount of investable assets per group. Regardless, each of these is a lens to understand clients and how they may be engaging (or not) with their investments.

Advisors who seek to deliver a higher level of personalization can use this downloadable infographic to tailor conversations to their clients’ engagement profile. Below are three potential scenarios:

• “In our last meeting, we spent time determining your risk tolerance, return expectations and the expected timeline to obtain your goals. We concluded that meeting determining your profile fits an aggressive investor. New research from Morningstar's Investor Engagement Index shows aggressive investors prefer more frequent portfolio reviews. I wanted to confirm during this meeting, is our current review schedule of once a quarter meeting your needs?”
• “New research from Morningstar's Investor Engagement Index shows a strong correlation between low comfort making investment decisions and low involvement in investment decision-making. In our previous conversation, you shared your low level of comfort in deciding what managers we wanted to use. Would you prefer me to spend more time explaining the reasoning behind the decision or would you like a more hands-off approach where we consider discretionary accounts?”
• “New research from Morningstar’s Investor Engagement Index shows that 84% of investors who feel comfortable making investment decisions also feel informed about the composition and performance of investments. I have put together some new data visualizations to show your portfolio performance and would love to share the insights I have been able to uncover about the decisions I think we should make regarding your allocations.”

Download this infographic to use Morningstar’s Investor Engagement Index in your client conversations.

Interested in more insights for advisors and wealth managers? You can:

• Explore evolving client expectations around fee flexibility.
• Get tips on answering popular questions for financial advisors.
• Download our Voice of the Investor or Voice of the Advisor reports.

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