The Relationship Between an Advisor and Retired Clients



An investor is most likely to employ a financial advisor when they are approaching retirement.

Many investors would benefit from an earlier relationship with an advisor, even if retirement income is their only goal in their investment decisions. But many investors choose to wait until they near retirement to discuss with an advisor their needs and desires as it relates to their investment portfolio.

Spectrem’s study Evolving Investor Attitudes and Behaviors* annually examines how investors use advisors and their thoughts about what they want from their investment professional. The study participants are segmented according to numerous demographic characteristics, and it is in the study of retired versus working investors that many significant differences are found.

The value of the research can be seen by one of the first questions investors are asked: “Do you have a primary financial advisor?” The percentage of positive responses increases as investors approach retirement. Only 51 percent of working investors have a primary financial advisor, while 54 percent of those investors who consider themselves semi-retired do, and then 63 percent of retired investors have a primary financial advisor.

This is a point advisors should be able to drive home with working investors who do not have an advisor, telling them that they are eventually going to want to work with an advisor to make the most of their retirement funds after they are done working. The earlier a client-advisor relationship is realized, the more retirement funds can be created so that the financial decisions in retirement are easier and fewer financial headaches occur.

It is interesting as well to see how retired investors use an advisor compared to working investors who have a financial advisor. Retired investors place 46 percent of their assets in the control of their financial advisor, and maintain self-control over a bit more than 50 percent of those assets. Working investors who have an advisor place only one-third of their assets in the hands of their advisor, and semi-retired investors increase that percentage to just over 38 percent.

It is a delicate conversation for advisors to have with their clients. “Give me more of your money” is not a successful approach to acquiring more assets in your client’s account with you. But, a discussion over how investors are allocating their funds on their own will allow an advisor to indicate how they might be investing those funds in a way to benefit the client. The research shows that the closer investors get to retirement, the more they depend on the skill of their advisor; displaying that trend to working investors might provide impetus to allocate more funds to their advisor.

There also seems to be a growing trust in financial advisors as investors get closer to retirement age. While 49 percent of working investors think advisors prioritize selling products over client needs, only 33 percent of retired investors have that image of advisors. At some point in an investor’s life, they come to recognize the value of an advisor and the motivation advisors have to provide for the client’s needs while also making a living as a financial advisor.



*This research is part of your Spectrem subscription.



©Spectrem 2020

Keywords: retirement, advisors, investors, assets under management, Spectrem, attitudes, behaviors