Earlier this year, the Department of Labor released the Conflict of Interest Rule, which is more popularly known as the fiduciary rule. It basically emphasizes the fiduciary duty of people who receive fees for providing financial advice, and just like CRM2, it shines a spotlight on the issue of fees and how advisors are compensated.
The debate around fees has polarized financial advisors into two camps: those who feel that clients are served best through minimized fees, and those who feel that increased disclosure would serve investors’ interests best. At the heart of it all, though, the issue is whether investors feel that they get sufficient value for the fees they pay – and it seems that they do.
“Well, it’s interesting to note that when you talk to individuals, about 70% of them will tell you that professional advice is worth the fee,” said Dave Goodsell, executive director at Natixis Global Asset Management. In an interview with Financial Advisor IQ, Goodsell said that investors appreciate the value of the service they pay for.
“[E]ven more of them that we spoke with, about 73% actually, say individuals who get professional advice are more likely to achieve their savings and retirement goals. So there’s a clear value that individuals have on this,” he said, clarifying that the trend held for all investors regardless of net worth.
When asked what people ultimately expect, Goodsell explained that investors just want help to become smarter and more educated. Whether it’s insight on their investments, personalized advice in times of volatility, or online tools that keep advisors accessible, what clients need is a sense that they’re being coached properly along the way.
As fund performance is harder for advisors to guarantee given current volatility, it’s much more critical to provide a satisfying client experience.
“You can control how often you communicate with them, what you talk to them about, how you connect with them when times are volatile. And really concentrate on what’s their experience as they try to go through and achieve those goals long term,” he said.
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