The Criteria Retired Investors Use



When an investor chooses a financial advisor with whom he or she plans to work, that person does so with the intention of maintaining that relationship until some reason comes along to sever it. Most investors do not expect to be disappointed by their advisor relationship. They expect to be satisfied and be able to maintain that relationship well into retirement, where financial advice is perhaps as important as it is during an investor’s working days.

In its monthly survey of investors, Spectrem asked investors a pair of questions regarding their selection of their primary advisor. The answers from investors who are currently retired provides advisors with a guideline older investors follow when choosing a financial professional.

The first question was simple and the result was surprising. Asked “how many advisors did you meet with or talk to before settling on your current primary advisor?” 53 percent of retired investors said “only the one I work with now.”

That’s an incredible response. It is possible that investors do a great deal of research about an investor before they ask to meet, but it is also possible that investors do not have a list of strict criteria that are make-or-break determiners for a professional relationship. It could also indicate that investors believe any advisor can provide the same kind of help as any other, and shopping for advisors is no more necessary than shopping for bottled water.

And keep in mind that this response came from retired investors, who probably selected their advisor years or decades ago, and who worked with that person for all of the necessary income stream and insurance planning needs required to have a safe and happy retirement.

After that initial 53 percent, another 43 percent of retired investors said they spoke to “one to three other” advisors before settling on the one they wanted. Only 4 percent of retired investors spoke to more than four advisors before coming to a decision about who would be their financial advisor.

So what were the factors which caused the retired investors to choose the advisor they eventually chose to work with?

It turns out that the most popular response points not to the person the investor would be working with but what that person had to offer in terms of advisor services. “Services offered” received 60 percent agreement as a criteria used to determine which advisor to use, and that was the most popular response among retired investors.

When an investor chooses an advisor determines which services matter most to that investors. Younger investors want services that relate to investment growth as well as education funding or tax concerns. Older investors are looking for advice on preparing for retirement, how best to access Social Security, and how to secure as much retirement income as possible.

But an advisor that can provide services that spray to all fields is likely to garner attention from a wide range of potential clients.

The other criteria which at least 50 percent of retired investors used to determine their advisor were “personality’’ (58 percent), and “Years of experience” (55 percent). It seems that a proper personality can lead to more years of experience, so the two criteria may go hand-in-hand.

Forty-nine percent of retired investors said certifications matter (of working investors, only 38 percent look at certifications), and 46 percent said fees matter. It’s also telling that retired investors looked at four other criteria before getting around to the expense of having a financial advisor.



©2018 Spectrem Group



Keywords: retired, investors, advisors, Spectrem, criteria, services, products