Redefining Adviser Value
Posted: 9 Jun 2015
Date Written: January 16, 2015
Technological advancements and regulatory reforms are presenting new challenges to the traditional financial advice profession. The streamlining of investment decision making is giving investors the opportunity to exercise greater autonomy over their savings decisions and execution. With many functions increasingly outsourced to automated systems, there is some concern that advisers find it harder to evidence their value add in this more streamlined world.
In this white paper, we discuss how financial advisers can continue to play a vital role in the lives of most investors particularly in the current context of regulatory and macroeconomic uncertainty. We investigate how advisory functions interact with the two systems of cognitive reasoning that underpins financial decisions and identify areas of this process which rely heavily on human interaction. We argue that areas of financial decision making where clients predominantly engage their emotional system are areas where advisers should focus on enhancing the value they add. Advisers should leverage their expertise to add “emotional value” by helping investors feel more confident and comfortable about their investment decisions while other inherently “economic” tasks such as optimal portfolio construction, rebalancing may be better performed by specialists.
This white paper provides an in-depth discussion of the key constituents of an advisory model that creates “emotional value” and sheds light on the characteristics that make advisers successful from a customer and business perspective.
Keywords: Behavioural finance, decision-making, financial adviser, client service
JEL Classification: G02, G11, G18
Suggested Citation: Suggested Citation