Third Annual Advisor Authority Study Confirms Customer Experience is Key Competitive Advantage for RIAs and Fee-Based Advisors to Retain Clients and Drive Greater Growth

Louisville, KY – Customer experience is a key competitive advantage that is essential for advisors to attract and retain satisfied clients, is fundamental for the growth and health of a profitable practice—and is expected to increase in importance. These are among the latest findings from the third annual Advisor Authority study conducted by Harris Poll and commissioned by Jefferson National, operating as Nationwide’s advisory solutions business. This new special report, “Customer Experience: The DNA of the Advisor/Investor Relationship,” provides a 360-degree view—why customer experience matters to advisors, what’s most important to investors, where they align, and the keys to unlock client acquisition, satisfaction and retention—based on an online survey of roughly 1,600 Registered Investment Advisors (RIAs), fee-based advisors and individual investors nationwide.

“Among the many revelations from this year’s Advisor Authority study, we learned that the customer experience is truly the DNA of the advisor/investor relationship—the foundation for building a mutually beneficial partnership that allows investors and advisors to reach their most important financial goals,” said Mitchell H. Caplan, leader of Nationwide’s advisory solutions business. “By serving RIAs and fee-based advisors for more than a decade, we have seen first-hand how advisors achieve the greatest success when the customer experience puts clients first. To gain new clients and earn more of their business, putting the client first is not just a regulatory requirement, it’s a business necessity that is increasing in importance.”

Key to Advisors’ Value Proposition

More than 9 in 10 RIAs and fee-based advisors (94%)—including the most successful who earn more and manage more AUM—say that the customer experience is important to their value proposition. Advisors, including the most successful, most commonly say this is because customer experience improves client retention (27%) and improves the advisor/investor relationship (26%).

Advisors also say customer experience distinguishes their firm from their competitors’ firms (15%) and helps to attract prospective clients (9%). When asked if the customer experience will become more important for attracting and retaining clients in the next twelve months, more than 8 in 10 advisors (86%) agree. Adding new clients is consistently rated as advisors’ top driver of profitability (53% in 2017, 56% in 2016).

Trust Must Come First

To make the advisor/investor relationship work, trust must come first. When asked to select the single most important attribute in their relationship, trustworthiness is rated number one by both advisors (44%) and investors (35%). And communication is key— rated second by both advisors (11%) and investors (16%).

But in their relationship, investors want results—and look for the track-record to prove it. While advisors rate a proven track-record a distant fourth (8%), investors say it ties for second (16%). Proven track-record rates even higher among the High Net Worth (23%), and the Ultra HNW (21%) investors.

Key to Success: Quality Communication, One-on-One Relationships

To create a successful customer experience, advisors must be in sync with investors’ priorities. When asked to select the top factors that contribute to a successful customer experience, advisors and investors agree that quality of communication (39% and 36%) and a personal one-on-one relationship (44% and 35%) are among the top two.

To create a successful customer experience investors continue to suggest that technology is no replacement for the human touch—and nothing can replace face-to-face. In the age of instantaneous digital communications, investors and advisors still say face-to-face meetings are their preferred form of communication, rated number one by both advisors (36%) and investors (36%).

Attracting Clients: Experience, Holistic Planning and Fiduciary Standard Matter Most

When asked to name up to three factors that influence investors to work with an advisor, investors’ priorities are clear year-over-year. In both 2017 and 2016, advisor experience is the number-one factor by a wide margin (46% in both years), and personalized advice for a holistic financial picture is second (26% in both years). Serving clients using a fee-based fiduciary standard is a close third, at 25% in 2017 and 24% in 2016.

Guided advice gives investors greater confidence—and greater optimism. When investors are asked to identify the main reason they have an advisor, the number-one factor by a wide margin is to feel more confident in their financial future (30%). Given the pivotal role that advisors serve, it should be no surprise to learn that investors who work with an advisor are more optimistic about their financial outlook for 2017 (59%) than those who do not (40%)—and year-over-year their optimism has increased (59% vs. 47%).

To download the Advisor Authority 2017 special report on “Customer Experience: The DNA of the Advisor/Investor Relationship,” financial professionals can visit: http://www.jeffnat.com/advisorauthority/chapter1