The Plan vs. the Portfolio
How advisor focus and education affect client
The Advising Through Uncertainty Study reveals differences between how financial planners and investment managers connect with their clients. The study also finds evidence that advisors’ applied knowledge may shape client behavior.
Who Weathers Uncertainty
The findings indicate that when clients receive broad and specialized financial planning services — including those for which advisors attain specialized knowledge — they exhibit less dramatic shifts in their feelings and behaviors, compared to those who rely on their advisors solely for investment management. In turn, advisors who focus on financial planning also feel less anxious about their practice than those focused on investment management.
To understand factors affecting client responses, the survey asked advisors where they usually focused their attention, unrelated to recent uncertainty. Financial planners are those who mostly or entirely focus on financial planning. Investment managers mostly or entirely focus on investment management. The data analyses below compare these two advisor segments and exclude advisors who said they divide their attention evenly between financial planning and investment management.
The research also reveals key areas in which financial professionals who hold College designations — such as the Chartered Financial Consultant® (ChFC®), Retirement Income Certified Professional® (RICP®), Chartered Advisor in Philanthropy ® (CAP®), Wealth Management Certified Professional® (WMCP®), and more — (i.e., College designees) differ from advisors without designations (i.e., non-designees).
As uncertainty peaked, significantly more investment managers saw a rise in client inquiries compared to financial planners. Slightly more non-designees reported an increase in inquiries compared to College designees.
The same groups also reported more clients shifted their focus – more often, to their investments.
Compared to financial planners, investment managers were also significantly more likely to report a shift in their clients’ focus. Slightly more non-designees reported a shift compared to College designees.
Financial planners were significantly more likely to say their clients’ focus shifted more to long-term plans. Investment managers and advisors without designations were significantly more likely to report their client conversations shifted to more talk of investments.
While few advisors said their clients requested changes to their financial plans, changes to investments were much more common among advisors who focused on investment management.
Compared to financial planners and College designees, investment managers and advisors without designations were slightly more likely to report an increase in client requests to change financial plans and almost twice as likely to report an uptick in client requests to change investments.
Although most advisors noted a rise in client anxiety, those who focused on financial planning reported significantly less than those who focused on investment management. Financial planners also had less anxiety themselves.
Nearly nine out of 10 investment managers said their clients were somewhat or very anxious during market volatility, and about seven in 10 financial planners agreed. More non-designees reported client anxiety than College designees.
More than one third of investment managers feel anxious about their practice during uncertain and volatile times — significantly more than their peers who focus on financial planning.
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