Louisville, KY – December 5, 2016 – There are two predominant types of investors: the Return Seeker and the Relationship Seeker, according to the latest findings from Jefferson National’s second annual Advisor Authority Study, a comprehensive survey of 1,416 RIAs, fee-based advisors and individual investors nationwide, conducted by Harris Poll. The study also identifies three prevailing advisor profiles: the Tactical Manager, the Active Advisor, and the Relationship Builder. Advisor Authority highlights actionable insights aligned with these profiles, to help RIAs and fee-based advisors better serve current clients, and attract new prospects, to grow their practice.
“RIAs and fee-based advisors are facing tremendous change, from the influx of new technologies to the DOL fiduciary ruling, but one priority remains constant: knowing what matters most to clients,” said Mitchell Caplan, CEO of Jefferson National. “We studied investors in this year’s Advisor Authority to arm advisors with actionable insights that help them understand clients’ needs and build deeper relationships. By providing personalized planning and comprehensive guided advice, advisors can help their clients build more wealth—and help their practice grow more assets under management.”
Understanding Investors: Two Predominant Profiles
Advisor Authority identified two predominant Investor Profiles by evaluating top concerns and unique preferences. Returns Seekers tend to be younger and wealthier, while Relationship Seekers are older and less affluent:
- Nearly three-fourths (73%) of Return Seekers are Millennial—and 69% have $1 million or more in investable assets.
- 32% say Fiduciary standard is their top factor for selecting an Advisor
- 82% think volatility will increase—and 81% feel pressure to revise their strategy in response
- 72% are confident that robos can manage volatility—and leveraging robos is one of their top factors for selecting an advisor
The Relationship Seeker (44% of investors who were profiled): Passive investing strategy and High-Touch engagement.
- One-half (50%) of Relationship Seekers are Boomers—and 70% have less than $1 million in investable assets.
- 74% say years of experience is their top factor for selecting an Advisor
- 65% think volatility will increase—yet only 27% feel pressure to revise their strategy in response
- Only 14% are confident that robos can manage volatility—and 33% are not familiar with robos at all
Understanding Advisors: Three Prevailing Profiles
Advisor Authority also identified three prevailing Advisor Profiles. Tactical Managers and Active Advisors target younger clients and have higher AUM, while Relationship Builders target older clients and have less AUM:
- 18% manage more than $250 million AUM
- 59% say Gen X clients will be the primary target over the next 12 months—and top strategy to attract new clients is social media (25%)
- 91% think volatility will increase—and 76% feel pressure to revise their strategy in response
- 77% are confident that robos can manage volatility
The Active Advisor (22% of advisors who were profiled): Active investing strategy and High-Touch engagement
- 21% manage more than $250 million AUM
- 48% say Gen X clients will be the primary target over the next 12 months—and top strategy to attract new clients is social media (46%)
- 74% think volatility will increase—and 67% feel pressure to revise their strategy in response
- Only 46% are confident that robos can manage volatility
The Relationship Builder (36% of advisors who were profiled): Passive investing strategy and High-Touch engagement
- Only 8% manage more than $250 million AUM
- 48% say Boomer clients will be the primary target over the next 12 months—and top strategy to attract new clients is working with client’s family and children (46%)
- 66% think volatility will increase—but only 44% feel pressure to revise their strategy in response
- Only 19% are confident that robos can manage volatility
Advisor Authority found strong alignment between certain Investor and Advisor Profiles. For example, the Return Seeker investors and the Tactical Manager advisors, who prioritize active investing and low-touch engagement, tend to anticipate an increase in volatility, are likely to revise their strategy in response, and are more confident in robo advisors. The Relationship Seeker investors and Relationship Builder advisors, who prefer passive investing and high-touch engagement, tend to be more concerned about low returns on investment, less likely to respond to volatility, and less confident in robo advisors.
“As the data clearly shows, both advisors and investors can be profiled by their shared preferences and characteristics. Advisor Authority defines these profiles to help advisors understand their clients and recognize where they align,” said Laurence Greenberg, President of Jefferson National. “After more than a decade serving RIAs and fee-based advisors, we have seen first-hand how advisors achieve the greatest success for themselves when they build a mutually beneficial partnership that puts the client first—and there is considerable research to show that aligning with client’s needs is a top driver of growth.”
Numerous industry studies show that the key to growth and sustainability relies on an advisor’s ability to clearly understand and align with their clients’ needs. The most recent RIA benchmarking study from Charles Schwab finds that the advisor-client relationship is critically important to driving growth—especially in challenging markets. According to a 2016 study by E&Y, there is a $175 billion to $200 billion revenue opportunity for the advisory firms that focus on aligning with clients and using client experience as a competitive advantage.
Jefferson National’s second annual Advisor Authority Study addresses many more of the investing and advising issues confronting RIAs, fee-based advisors and investors—and the innovative techniques that they need to succeed in today’s volatile market, with a special focus on the most successful advisors and the most affluent investors. To download a copy of Advisor Authority, financial professionals can visit: www.jeffnat.com/advisorauthority.
To download the Advisor Authority Special Data Book: Investor and Advisor Profiles, financial professionals can visit: www.jeffnat.com/aa-profilesdata/
The second annual Advisory Authority Survey was conducted online within the United States by Harris Poll on behalf of Jefferson National from March 3 – 29, 2016 using a sample from the Harris Poll Panel of Financial Advisors and investors. Among the 683 Financial Advisors, there were 440 Independent Registered Investment Advisors and 243 Broker/Dealers. Among the 733 Investors, there were 167 Mass Affluent, 184 Emerging High Net Worth, 199 High Net Worth and 183 Ultra High Net Worth.
Respondents for this survey were selected from among those who have agreed to participate in Harris Poll surveys. Because the sample is based on those who were invited to participate in the Harris Poll online research panel, no estimates of theoretical sampling error can be calculated. A complete survey method, including weighting variables, is available upon request.
About Harris Poll
Over the last five decades, Harris Polls have become media staples. With comprehensive experience and precise technique in public opinion polling, along with a proven track record of uncovering consumers’ motivations and behaviors, Harris Poll has gained strong brand recognition around the world. Contact us for more information.
About Jefferson National
Jefferson National is a leading distributor of innovative tax-advantaged investing solutions for RIAs, fee-based advisors and the clients they serve. Trusted partner to a network of 4,000 advisors, Jefferson National provides greater efficiency, transparency and choice through an adaptable technology platform, award-winning distribution strategy and cost-effective servicing capabilities. Named the industry “Gold Standard” and winner of more than 50 industry awards, including the DMA 2010 Financial Services Company of the Year. The company serves advisors and clients in all 50 states and the District of Columbia, through its subsidiaries Jefferson National Life Insurance Company and Jefferson National Life Insurance Company of New York. To reach our advisor support desk, please call 1-866-WHY-FLAT (1-866-949-3528). To learn more, please visit www.jeffnat.com and follow Jefferson National on Twitter at @jeffnat.