Prosperous households in the US seek to increase their savings from employment and invest for long-term gain, according to forthcoming research from II’s Custom Research Lab. And while preparing for major expenses, professional shifts, and retirement are cited consistently as high priorities, wealth management clients also see value in bringing order and discipline to their financial lives through their relationships with investment professionals.
Investment performance and financial planning – but also order and discipline
Early results from an Institutional Investor study reveal that asset accumulation through savings from employment and investing for long-term gain are consistently high priorities among current and prospective wealth management clients. Fully 77% of the 250 respondents to an August 2024 survey say that increasing savings from employment is among their highest priorities, and 62% cite investing for long-term gain as a top objective over the next five years.
Respondents in the study bring diverse aspirations to the next several years, as 47% see preparation for retirement or professional change as a top near-term objective, while others aspire to pay down debt (43%) or get ready for major expenses such as family education expenses or real estate (42%). Notably, however, respondents also hope to bring order and clarity to their financial lives by consolidating accounts and centralizing the oversight of their money. In total, 85% of study participants rate “rationalizing and organizing your financial life” as a primary or secondary objective over the next five years.
Wealth management clients hope for more than financial security and orderly account administration. They seek financial counsel that is aligned with their outlook on the world. The vast majority of respondents agree strongly (47%) or agree somewhat (43%) with the statement, “I am eager to ensure my money is invested in companies and investment products that are aligned with my values.” A majority of respondents also express optimism about their own financial futures (86%) and the near-term outlook for the U.S. economy (51%).
Working with advisors
In a series of questions about their relationships with their wealth advisors, respondents reveal a keen interest in the professionalism and expertise of those who manage their investments. The vast majority of study participants (90%) agree strongly that they “pay close attention to advisors’ promptness and the consultative nature of responses to questions and requests.” Similarly, respondents expect portfolios to be customized to their unique requirements (84%) and call for their advisors to communicate proactively about favorable or unfavorable market events (77%). Clearly, a strategy of “set it and forget it” has given way to a more hands-on, professional level of engagement between advisors and their clients.
This client/advisor engagement may well bring difficulty for some wealth managers, as they seek on one hand to keep their clients well informed without, on the other hand, cluttering up the inboxes, desktops, and voicemails of their clients. More than one-half of clients in the study say they usually review investment performance reports carefully (54%), while 40% review them occasionally and 6% do so rarely. A separate question reveals that 56% of respondents are very or somewhat willing to interact with their wealth advisors using technology tools – e.g., phone, tablet, or computer applications – while 44% are somewhat or very reluctant to do so. Advisors may be well advised to tailor their engagement methods to the individual preferences of busy clients.
Queried on their expectations from advisors, respondents are notably eager for advice and counsel on how to define and pursue their long-term financial goals realistically (76%). Clients also expect advisors to provide expertise and access to sophisticated financial products that are typically unknown to retail investors (44%).
Additional services
Wealth management clients show enthusiasm for some additional services that are adjacent to conventional asset management – but not all. Fully 51% of respondents say they have great interest in tax planning and optimization services, and similar proportions of respondents report great interest in budgeting/bill paying services (50%) and access to insurance advice and products (49%).
However, clients’ relationship with their wealth advisor may well have some boundaries that are worth noting. Only 26% of respondents say they have great interest in receiving legal services through their investment/wealth advisor. Similarly, only one-quarter or less of respondents report great interest in receiving banking/lending services, trust and estate planning, or counsel on philanthropy through their financial advisors.
You can read more about this study, along with II’s research on model portfolios and their value to wealth managers and their clients, in forthcoming reports from II’s Custom Research Lab in October.
