A shocking new report: Investors aged 50+ are firing their financial advisors, moving to online platforms that allow them to manage their own finances.
It’s a common assumption that people over 50 are “tech-illiterate” and rely heavily on the assistance of a personal financial advisor. Recent developments suggest these assumptions couldn’t be further from the truth; 49% of investors over 50 years old are self-directed.
It’s really happening.
In the same Investment News article, titled “Older investors turn to the web to manage assets”, it is suggested that this shift away from financial advisors is primarily due to the extra expenses, lack of convenience, and trust issues stemming from the 2008 recession.
Some ex-clients made the shift when they begin to see financial advising as a ‘waste’ of money. Investment News shared the story of 76-year-old investor Lois Mayerson who fired her advisor 20 years ago, at the age of 56. “The reason I got into [managing my own portfolio] was that we had some lovely, charming, delightful financial advisors who were losing money faster than we could put it into our accounts.”
Additionally, now-self-directed investor Cleveland O’Neal III detailed how phoned his advisor requesting to have his assets moved to cash in 2008. His advisor ignored his request and a few days later O’Neal ended up losing his funds, just as he had feared. “I had a 40% loss, so I fired my advisor. They didn’t follow my directive. I’m the client. Move it to cash. Period. These clowns had put me in this ridiculous situation of being 40% under.”
While it’s surprising that O’Neal’s advisor would ignore his request, it’s also a problem that O’Neal wasn’t able to see the activity on his accounts. When clients are nervous about the market or their assets (like many people were during the recession) it is best for them to have access to their own information. Transparency has shown to qualm fears and build fundamental trust in their advisor.
Some other clients interviewed complained about the three-hour quarterly meeting, a topic we tackled in The Key Lesson to Effective Client Meetings. This time lost out of their day became more of a hassle than a reward, especially when the information discussed was seen as an unnecessary overview.
There you have it. A concerning update from Investment News.
For those of you who hear this and what to take action…
What’s an advisor to do?
It’s simple, but simply complex. Financial advisors have always faced the challenge of demonstrating their value – tangible value – to clients. But while many have assumed that “tangible value” comes in the form of % return, etc., these ex-client stories remind us yet again of the other, more qualitative elements they value: Relationship transparency and consistent communication.
Here’s where your quantity of clients can put quality of service in jeopardy. How do you do it?
How the Blueleaf platform brings automation to client engagement.
The Blueleaf platform gives clients an online portal, available 24/7. It’s beautifully designed, easy to navigate and understand, sprinkled with your firm’s branding elements. With the unique feature of custom weekly push updates, advisors on Blueleaf are also automating consistent, clear, valuable touch-points with every client, big or small.
Transparency with clients involves more than information visibility. Being transparent also means “honest and open”, “not secretive”, “easy to notice or understand” (Merriam-Webster).
The Blueleaf portal was designed for clients first. “Easy to understand” is our foundation. With Blueleaf, advisors are able to provide complete relationship transparency, automatically, in a way clients truly understand. Hand clients a log in to their own easy-to-understand, on-demand reports with Blueleaf.com.
Customer quote from James E. Wilson, CFP®, on his blog Building Uncommon Confidence:
Transparency can sometimes be enhanced by technology. One of the reasons we use Blueleaf for our portfolio reporting is the highly transparent nature of this tool. Clients receive a simple, easily understandable report every week in their inbox. They know where their money is, the allocations and current values. We also have the ability to aggregate other investment / retirement accounts with Blueleaf that make this connection even more valuable.