How Prospective Clients Decide To Take the Advisor Leap

As advisors know, there are plenty of self-directed investors out there and not all of them are interested in becoming clients. Plenty are and that’s good news.

A September 2021 survey by Broadridge of 1,000 investors with at least $10,000 in assets indicate 52% have self-directed accounts, but just half of those market participants work with advisor in some form and just a third work exclusively with a financial professional. Better news: 44% of those respondents said they’d like to start working with a registered investment advisors.

Point is the landscape of prospective clients is teeming with a variety of individuals. As noted above, some want the help of a professional. Others say they do but probably won’t take action to that effect. And there’s the group that simply like having full control over their investments and will never engage an advisor.

Advisors can’t do much about that last group and, in many cases, it’s not worth the effort. However, the other two cohorts are worth connecting with, but prior to doing, it pays to examine what goes into a prospective client’s thought process and what takes them from “prospective” to “real.”

Understanding Prospective Client Psyche

I often note in this space that advisors are not psychologists or therapists, but there are elements of those professions in managing money. It’s important to remember that when working with the self-directed crowd.

“We often see it manifest itself in several different ways—time, interest, and expertise. So in many cases, somebody, they don't have the time, and they just say, ‘I do not … I'm a busy executive, or I have a career, or I have children,’ or whatever the case may be, and they just need the help to alleviate the time pressure that they might have,” observes Bryan Olson, head of Investor Advice Solutions at Schwab and president of Schwab Wealth Advisory.

Olson highlights another group advisors should consider targeting: Prospective clients that know they need to be invested, but have no interest in doing it themselves. This cohort of folks comes from a variety of demographics, life experiences and asset groups. For advisors focused on the top and bottom lines, think about it this way. There plenty of well-heeled executives, engineers and medical professionals – to name just a few careers – out there that don’t want the perceived burden of managing their own money.

Likewise, a group that’s ripe for embracing an advisor relationship is those that are intimidated by financial markets. As is the case with the folks mentioned above, this group is densely populated with clients that should be attractive to advisors.

“They just don't know about the markets,” adds Olson. “They don't know about financial planning—just like in any area of your life that you might seek out experts, whether that's medical, building something, getting your car repaired. Often we just don't have the expertise we need to do it ourselves, so we seek out an expert.”

What Advisors Need to Be Aware Of

One thing that advisors are learning is that technology is changing the game and part of that includes the ability of prospective clients to be more educated prior to meeting with an advisor.

Additionally, there are ample resources for clients in the “considering” stage to research advisors so it’s on advisors to ensure they’re putting their best internet foot forward.

“Our industry has evolved quite a bit over the last several decades, and most major firms, Schwab included, have great educational resources on thinking about an advisor, thinking about the relationship, and then on the actual advisor themselves,” concludes Olson. “There are also other places one can go to find their … the biography, the philosophy of the firm, all of those items. There's also some industry regulatory bodies that have produced information, one being BrokerCheck, all one word. If you want to look it up on the web, it's a site that's maintained by FINRA, which is the Financial Industry Regulatory Authority. And you can look up an advisor by name and get their bio, their education, the licenses they have, any disciplinary action that's been taken against them.”

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