FINANCIAL ADVICE AND PLANNING FOR THE MASS AFFLUENT (July 2017)

The Decision Making Process

Traditional and Alternative Sources

Balancing High Tech and High Touch

Key Finding from a Previous Phoenix Synergistics Survey:

According to the 2016 Phoenix Synergistics survey, Online Financial Management and Advisory Tools, only about one-third of Internet households have heard of robo advisors and an even smaller number use them.  How likely is it that these new automated advisory services will catch on with consumers as awareness in the market grows?

Highlights of the Study

This study examines the experience of mass affluent households with financial advice and planning.  Sources of influence, preferences, and reaction to automated and non-traditional services are assessed.

 

National Internet Survey – The survey will include 1,500 online interviews with consumers age 18 or older. Asset quotas include: 200 – <$100K; 275 – $100K-$249.9K; 275 – $250K-$499.9K; 275 – $500K-$749.9K; 275 – $750K-$1M; and 200 – more than $1M.

Key Dates

April 28, 2017 – Final acceptance of client comments on the questionnaire.

April 28, 2017 – Charter fee date.

June 2017– Initial results available.

July 2017 – Project Report available.

Strategic Objectives

  • Profile households’ savings and investment activity – encompassing accounts and services held, relative conservative/aggressive orientation, reasons started to save or invest, and approach to decision making.
  • Assess consumers’ approach to financial planning – including the perception of current planning efforts, dealings with advisors or professionals; the types of services, products, or areas addressed through the planning process; and the degree of confidence in current relationships.
  • Gauge the future potential for planning and advisory services – such as determining future specific financial needs, the likelihood of working with a professional or advisor, important criteria in selecting an advisor, and reasons for non-interest.
  • Explore the role of technology as competitive or complementary to traditional financial planning – examining usage of online personal financial management, online planning tools, and experience with robo advisors or robo investors.
  • Examine the process of implementing an advisory relationship – detailing the motivations for first starting to use an advisor or professional, the initial method of contact, what types of initial discussions or assessments took place, types of pricing arrangements, and moving or ending relationships.
  • Determine communication preferences in dealing with an advisor or professional  – covering aspects such as frequency and channels of contact, satisfaction with degree of contact, expected response times to a question or issue, and the importance of human contact for robo advisory services.
  • Identify, segment, and target those consumer households that are primary markets for financial planning services – utilizing variables such as age, household income, asset level – and attitudinal factors related to needs, perceptions, and priorities.

Research Issues

  • Households today are faced with a wide, and perhaps confusing, array of options and choices for obtaining financial advice and planning.  Traditional players – such as bankers, brokers, and financial planners – certainly continue to have a strong presence but are faced with challenges and opportunities related to technology adoption and integration, the expectations of emerging market segments, and non-traditional players.
  • Consumers are bombarded by offers of advice on household budgeting and finance, saving and investing, insurance needs, and estate planning.  How they sort through the deluge of magazine articles, blog posts, webinars, community forums, emails, and phone calls to determine what is valuable information or not is an important process to understand.  Concurrent to this, looking at the role of personal interaction – not just from financial representatives but also friends, family, or other reference group members is vital.  The level and depth of financial planning available to households also represents a wide spectrum.  Ascertaining what degree customer segments want – ranging from frequent face-to-face contact and guidance to a technology-driven “do it yourself” approach – is a key objective.  Determining how a “personal touch” and technology can interact to deliver value to customers is also important.
  • Prior work by Phoenix Synergistics has found that robo advisory services – despite being thought of as displacing the human element – have broader appeal when there is an option for contacting a representative.  How frequently customers want to be contacted, and by what channels, is a critical element in any advisory relationship.  Financial institutions and investment organizations are faced with the challenge of understanding the consumer perspective in designing and marketing their financial advisory and planning services – in terms of the degree of information, advice and recommendations, and transaction capability desired. [F254]