NEW YORK, NY, October 5, 2021 – The Money Management Institute (MMI) and Aon have released new research from the second tranche of their Advisory Solutions: Expectations and Experiences series. In findings from the third report in this year’s four-part series, investors who have had a recent financial planning discussion are bullish about 2021 U.S. market performance and are more likely to recognize the value of financial advice, with approximately half saying the value of advice has increased since the onset of the COVID-19 pandemic. Clients who received advice during the 2020 period of market volatility are also more likely to report that the performance of their investments exceeded expectations.
Surprisingly, even with the increase in client demand for financial advice, only about two in five clients (43%) report having had a financial planning discussion in the last 12 months, and about three in five (62%) reviewed their portfolios with their advisors—both percentages relatively unchanged compared with 2019 results (44% and 63%, respectively.)
“High-quality financial planning is more important than ever, but it’s important to understand that clients are at different points in their lives, and their needs can vary dramatically,” said Craig Pfeiffer, President and CEO of MMI. Peter Keuls, Global Head of Wealth Management at Aon, added: “The upside is if advisors are able to address unique client concerns in the financial planning process, our data shows overwhelmingly that these clients are more satisfied, more confident about what to expect, and happier with their investment performance—despite the volatility experienced in the last year.”
The study also found that:
- A third of clients note their use of digital financial planning tools offered by their wealth manager also increased during the pandemic. The proportion edges slightly higher to 35% among both clients with under $1 million and those with over $3 million in assets under management, indicating that clients across different wealth levels value the digital experience. And when asked to forecast, nearly all say that, over the next 12 months, their use of planning tools will either remain the same or increase.
- Financial planning discussions impact client behaviors as well as satisfaction scores. During financial planning discussions, clients single out certain activities as being particularly impactful—for example, steps they could take to better align future spending and savings with their financial goals, taking time to review current expenses/savings and investment goals, and simulating their investment portfolio against investment goals. About half (48%) of clients who had a financial planning discussion adjusted their portfolio allocation in response to 2020’s market volatility compared to 31% of those who did not have a planning discussion.
- Financial planning conversations have moved online—with an increasing proportion of digital behaviors likely to stick. Digital connectivity has meant that advisors have continued to virtually meet with clients and deliver high-quality advice when it matters most. Overall, results suggest that both clients and advisors are adapting to new modes of investment management and financial planning, with approximately two-thirds favoring either telephone or online conversations.
- Financial planning also often translates into greater financial resiliency, such as confidence in reaching retirement goals. The majority (68%) of investors said they were very confident in the financial plan developed with their advisor over the last 12 months. Moreover, 69% of clients who have sought financial planning advice are highly confident (i.e., 9 or 10 on a 10-point scale) of reaching their retirement goals.
Commenting on these findings, Pfeiffer said: “One of the clear messages we see from this research is that many clients are interested in more direct interaction with their financial plan in between their advisor discussions, primarily through online planning and forecasting tools. Progressive advisors need to be ready to embrace this evolving form of client participation in the planning process.”
About Advisory Solutions: Expectations and Experiences: Now in its second year, Expectations and Experiences is a four-part series, based on a proprietary research program sponsored by the Money Management Institute (MMI) in association with Aon, that explores the gaps that have emerged between client expectations for investment advice and solutions and firm delivery, and how these gaps affect client satisfaction as well as business performance.
About the Money Management Institute (MMI): Established in 1997, the Money Management Institute (MMI) is the industry association representing financial services firms that provide financial advice and investment advisory solutions to investors. Driven by our promise of increasing connections, knowledge, and growth for our members, MMI is dedicated to fostering professional relationships, sharing experiences, and expanding the industry’s influence through advocacy and education. MMI offers premier professional development programs, specialized curriculums, and facilitates peer-to-peer connections through our communities and conferences. As part of MMI’s longstanding commitment to diversity and inclusion, the Gateway Foundation provides clear pathways to entry and career advancement in the financial services industry for historically excluded and underrepresented groups. MMI member firms include wealth manager, asset manager and solutions provider firms of all sizes and professionals representing all functional areas. Follow MMI on LinkedIn.
About Aon: Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Our colleagues provide our clients in over 120 countries with advice and solutions that give them the clarity and confidence to make better decisions to protect and grow their business. Follow Aon on Twitter and LinkedIn. Stay up-to-date by visiting the Aon Newsroom and sign up for News Alerts here.
Kelly Caporale, Money Management Institute, firstname.lastname@example.org, (646) 868-8514
Robert Elfinger, Aon, email@example.com, (312) 381-0071