C is for Customized experience & family wealth planning: Examining the expanding role advisors now provide

Fast-food chains that let you "have it your way." Coffee shops that offer a myriad of options to make your morning brew just the way you like it. Bespoke tailors. Cars have a broad selection of features, from steering wheel covers to roof racks to lighting and touchscreens. And then you can add even more: from seat covers to Apple Play.

How to create a customized client experience for investors

It seems that just about anything can not only be customized but personalized to appeal to individual interests. Everything from the advertising feed that appears on your screen when you open a browser to viewing suggestions on your favorite streaming service or news app are now ingrained in our everyday user experience.

We all like and have come to expect that personal touch – and it is no different in investing. This is clear in the growing demand from investors for a more personalized client experience and an investment portfolio that reflects their unique goals, circumstances, and preferences.

Goals, circumstances and preferences for financial professionals

The expectation and value of delivering such customization is captured in C, the third letter in our 2022 Value of Advisor formula. Our annual Value of Advisor study quantifies the value that advisors bring to their clients through the myriad of services they provide. The formula is simple:

Value of an Advisor = A+B+C+T

Value of an advisor formula

This is the third in a series of blogs providing greater detail into how we determine our formula. We've already discussed the value that advisors provide by actively rebalancing portfolios to keep them within an investor's risk profile– the A in the formula above. And we've written about the B in the formula – the behavioral coaching financial advisors provide that is intended to keep their clients from reacting with their emotions when markets are volatile.

While the letter C has been part of the formula since we first launched our study eight years ago, it has transformed over time to reflect the changing needs of investors. Originally it stood for the "cost" of building an investment portfolio, which was one of the primary duties of a stockbroker.

Generational wealth transfer

We revised it this year to stand for a customized experience and family wealth planning as we recognize the increasing importance of including spouses and children in a long-term investment plan. We've all heard about the generational wealth transfer that is beginning to take place and we believe advisors who incorporate a holistic view of an entire family can provide significant value now and into the future.

Advisors have responded to client expectations for increased personalization by expanding and deepening their services. Beyond the traditional broker role of selecting the right investment solutions for their needs, many advisors today are providing holistic wealth management services to not just their clients, but their clients' families.

Click image to enlarge

Comprehensive wealth planning

Why family wealth planning is important

Most people's lives invariably become more complex over time—and each financial decision made has the potential to impact their entire family. As young adults, investors are generally in the accumulation phase, building their portfolios while simultaneously planning a wedding, buying a home, raising children, saving for their children's educations, and establishing their careers. When they enter the preservation stage before retirement, they may also need to care for elderly parents, manage their health, and structure their investments to minimize their tax burden. Then, in the distribution phase when they are no longer working, they may need to consider long-term care or creating a legacy for the next generations of their families. Helping clients to address these and many other financial decisions means a shift in focus to planning for outcomes.

Uniqueness of each investor is shaping the future

Clients' increasing expectations for individualized service and the growing complexities of their needs—has created the need for scale in advisor practices. The need for scale has increasingly influenced advisors' approach to investment solutions. Advisors aligning their product recommendations to client goals by utilizing more outcome-based and professionally-managed strategies as opposed to shouldering the primary responsibility of making individual investment recommendations. It has also led in many cases to the creation of a network of experts with the advisor at the center, representing the investor's interests.

Many advisors now work closely with estate lawyers, insurance planners, accountants, and lifestyle consultants, among others, to develop a comprehensive long-term plan for their clients. This ensures consistency and coordination in planning with the trusted advisor at the center. It quickly becomes clear how valuable an advisor's expertise and commitment to delivering a customized experience can be to their clients.

The next generation client

Then there is the issue of the great wealth transfer. Research suggests that nearly 70% of investible assets will be in the hands of the next generation by the start of the next decade¹. To ensure they can keep that next generation as a client, many advisors are engaging the spouses in the planning. Studies have found that a majority of widows will switch financial advisors within a year of losing their husband²—unless she already has a good relationship with that advisor. And often, where mom goes, the kids are likely to follow.

Just as we all love, and expect the personal touch at a resort on holiday while servicing our cars, and even at our local juice bar, we are coming to expect the personal touch when it comes to our investments. After all, that is what each of us has worked hard to build and is what will sustain us in our retirement, help us build our legacy, and be passed on to our heirs.


Featured insights from our experts

Value of Customized Client Experience & Family Wealth Planning Video

Watch video button

The value of personalization for financial advisors is now

This means that the work advisors like you do is important and has incredible value. Consider all that you do to guide your clients through the defining moments of their lives, ensure their investments align with their goals, provide expertise on taxes, insurance, careers and major purchases, and help plan their retirement, long-term care, and legacy—among myriad other services. And each client's goals, circumstances, and preferences are unique to them.

Did you realize all of that? More importantly, do your clients? This brings us to the vital role of communicating your value.

Value of an AdvisorIn our annual formula, C is for customized experience and family wealth planning. To us, that sounds a bit like you have your client's financial security– and that of their family – in your hands. Let your clients know all that you are doing for them and the vital role you are playing to ensure their future is what they want. We encourage you to share our Value of Advisor study and tell your clients how much more you do than select an investment portfolio. Your clients will no doubt feel reassured – and grateful. They may even introduce you to trusted friends and family members.

Click here to learn more about the 2022 Value of an Advisor Study.

¹ Source: https://info.cerulli.com/HNW-Transfer-of-Wealth-Cerulli.html

² Source: https://www.mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management