Over the past two years, it sometimes felt like every time we turned on the news, the worlds we live in, professionally and personally, were turned upside down. As financial advisors, it’s critical that we recognize what our clients hear on the news, walk alongside them, and help them see through a variety of perspectives. In fact, a recent survey conducted by Edward Jones with Morning Consult shows that investors’ needs for their financial advisors are changing. More than half of Americans say a variety of factors, including Covid-19, interest rates and the unemployment rate, impact their expectations of their financial advisor. That figure jumps to three-quarters of millennials working with financial advisors.
Below are three of the key factors driving changing investor expectations and steps advisors can take to meet client needs in the current environment.
Disruptive economic conditions
Investors have certainly faced disruptive economic conditions over the past year, which may cause them to reconsider their investment decisions and make emotional changes that can have serious repercussions on financial health. An overly negative view of the economic outlook can lead to an emotional sell-off of solid investments, while an overly optimistic view can lead to riskier investments being bought. Either action can negatively impact an investor’s financial goals.
In times of market volatility, financial advisors need to be especially proactive in communicating with clients who may be more nervous and inclined to make emotional decisions. Remind them of the long-term strategy you have in place to achieve their goals and why it shouldn’t be influenced by short-term market fluctuations.
Changing millennium priorities
As we engage with the next generation of customers, millennials are more involved in their financial preparation than their parents and grandparents. Some also delay having children, choose not to have children, and/or choose not to own a home more than previous generations.
When working with younger clients, it’s essential to assess their desired level of involvement in the process and understand their goals, so you can tailor your strategy and communicate accordingly. With more information at their fingertips than ever before, make sure they critically assess and think about the sources of their financial advice.
Financial literacy is another factor contributing to changing investor expectations. According to our survey, there is a gap in economic and financial knowledge, leaving almost a third of Americans feeling less confident in their economic knowledge. Trusted financial advisors can play a key role in building financial literacy and confidence, two essential components of financial resilience.
Many emotions impact financial decisions, including stress, anxiety, frustration, worry, disappointment, and excitement. Those who work with a financial advisor tend to find comfort in their financial advisor’s knowledge and experience, which helps them feel more informed and less stressed and frustrated with their finances.
As financial advisors, we believe we have a responsibility to serve our clients comprehensively, educating them on how the market works and reassuring them that continuing to follow a well-thought-out strategy is one of the best ways to help weather the storm. We know how important it is not to let fear or anxiety about market volatility, or the rush to invest, derail long-term goals. That’s why, at times like these, it’s all the more important for investors to have a financial advisor to help them stay focused on financial results based on their long-term goals.
Ken Cella is Director of Branch Development at Edward Jones.