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What Americans Really Want From Their Financial Advisors
They want help from a human, not a robot
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Happy Sunday everyone, and welcome to Benzinga’s financial advisor newsletter.
Today we’re discussing what Americans say they really want from financial advisors, and how advisors can adapt their practices to better meet those needs.
So, let’s get into the Industry Chatter!
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INDUSTRY CHATTER
A recent report from Morningstar reveals that investor preferences are more nuanced and personal than many financial professionals might assume. The study used four different approaches to uncover what investors truly value in their advisors.
Humans Over Robots
Key findings suggest that investors value personalized advice and the human touch that advisors provide, which technology cannot replicate. The studies identified four major themes that emerged as crucial to investors: reliable advice, achievement of financial goals, keeping clients on track, and maximizing returns.
Investors consistently prioritized trustworthy advice and expertise tailored to their specific needs. They particularly appreciated advisors who understood their unique financial situations and could provide personalized recommendations based on individual circumstances.
Reaching Goals And Maximizing Returns
When asked to rank advisor qualities, investors placed the highest importance on helping reach financial goals, followed by the ability to maximize returns and possession of relevant skills and knowledge. In terms of willingness to pay, investors showed the most interest in services such as goal identification, personalized recommendations based on their financial behavior, and thorough evaluation of investment research.
The study also explored motivations for hiring and retaining advisors. Common reasons included discomfort in handling finances independently, the need to address specific financial needs or goals, and a desire for behavioral coaching. Investors often cited a lack of confidence in managing their own finances and the need for guidance in navigating complex financial landscapes. Many appreciated advisors who could provide a balanced perspective during market fluctuations and help them make informed decisions.
Morningstar emphasizes the importance of soft skills in the advisor-client relationship. Investors seek advisors they can trust, who understand their unique situations, and who can guide them towards their financial goals with empathy and insight.
The Personal Touch
The findings suggest a shift in the value proposition of financial advisors. While investment management remains important, there's an increasing focus on "investor management" – helping clients set and achieve goals, providing personalized advice, and offering behavioral coaching to keep them on track.
In conclusion, the future of financial advice may lie in balancing technical expertise with a deep understanding of individual client needs and behaviors. This approach emphasizes the human element that technology alone cannot provide, positioning skilled advisors as invaluable partners in achieving financial success.
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MARKET RECAP
August ended with a strong rebound in Wall Street’s major indices, reversing the early month market selloff as robust economic data dispelled recession fears.
The U.S. economy roared at an annualized growth rate of 3% in the second quarter, surpassing earlier estimates of 2.8% and more than doubling the pace recorded in the first quarter. This marked the eighth consecutive quarter of expansion, bolstered by a substantial upward revision in consumer spending.
The health of household finances was further underscored by stronger-than-expected acceleration in personal spending and income in July.
The Federal Reserve’s preferred inflation gauge plateaued after three straight months of decline, yet it fell short of the anticipated uptick, paving the way for a September interest rate cut.
The Dow Jones Industrial Average, as tracked SPDR Dow Jones Industrial Average ETF (DIA), notched fresh all-time highs, while the S&P 500 index inched closer to its previous July peak.
The positive market momentum persisted despite Nvidia Corp. (NVDA)’s much-hyped quarterly earnings — the most anticipated event of the week— failing to impress investors with heightened expectations.
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EV Sales Slow
U.S. electric vehicle sales in 2024 are projected to reach only 9% of the market, down from the previously estimated 12%, according to J.D. Power. The slowdown is attributed to increased competition from gasoline-powered vehicles and delays in new EV models from major Detroit automakers like Ford Motor Co. (F) and General Motors (GM).
Real Estate Inflows
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Homebuyers Pressure Builders
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THE WEEK AHEAD
Economic Data
Monday: EU manufacturing PMI
Tuesday: US manufacturing PMI
Wednesday: US job openings, Bank of Canada interest rate decision
Thursday: US services PMI and nonfarm employment numbers
Friday: EU quarterly GDP numbers, US nonfarm payrolls
Earnings
Click here for the full calendar of economic data and earnings reports.
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