September 21, 2023

Holistic approach for financial advice valued by consumers, study finds

A recent LIMRA surveyed revealed that consumers choosing to work with a financial professional value a holistic approach that may offer services such as debt management, budgeting, tax strategy, retirement preparedness, estate services and college planning.
Trustworthiness, experience, expertise, and communication skills were the top attributes important to consumers, according to the survey.

According to LIMRA, financial professionals who take more of a holistic approach to serving their clients are more service-oriented and consider their clients’ entire financial situation and needs, rather than focusing on insurance products or investment advice alone.
Consumers who value a holistic approach are more inclined to recommend their financial professional than others, LIMRA said.

Additionally, clients who work with financial advisors specifically — as opposed to investment brokers or other financial professionals — are more likely to say that their financial professionals take a holistic approach. This is also true of older, wealthier clients.
Given their experience, people who currently work with a financial professional are much more likely to note the importance of a holistic approach than others and are less concerned with recommendations and ratings than people who are interested in working with a financial professional.

Role of gender in choosing a financial professional

Most consumers report little preference when it comes to the gender of a financial professional, LIMRA noted. However, when all other qualifications and attributes are equal, consumers were asked to describe why they would prefer one gender to the other.

Consumers — particularly those who prefer a female financial professional — often describe soft skills that they associate with the gender or how a financial professional of that gender would likely make them feel. They describe them as being better at making people feel comfortable, more understanding and better at communicating.

Gen Z women, ages 18-26, and members of the LGBTQ+ community, are much more inclined to favor a female financial professional, according to LIMRA. Moreover, people who currently work with a female financial professional, especially women, are more likely to prefer a woman if they were choosing today, compared to the proportions of people who work with a male financial professional saying they’d prefer a male.

People who prefer a male financial professional describe their preferred gender as being better when it comes to the hard skills associated with the job, e.g., knowledgeable, efficient, and experienced. Additionally, those who work with male financial professionals are more likely to describe their approach as holistic, compared to people whose financial professional is female.

Clear, understandable fees are also important

In addition to these attributes identified by LIMRA, the quality, “fees that are clear and understandable,” continues to lead annually with consumers, according to Laura Varas, CEO and founder of Hearts & Wallets. The firm recently tracked these attributes in its report, Wants and Pricing 2023: Growing Demand for Access, the Allure of “Free” and Top Performer Firms.

Attributes related to “understanding and empathy” are also the foundation for enduring client relationships. For example, Varas said, “explains things in understandable terms” influences trust. The difference between poor and good performance on “explains things in understandable terms” adds +1.2 points of trust measured on a scale of 0 to 10, she said. “In other words,” she added, “advisors should be very careful to avoid industry jargon with prospects.”

Four of the other top 10 wants are related to access channels. Within “Access,” the importance of “clear, useful statements” and “quality of internet account access” grew the most year over year at the national level, while “has good mobile apps” has grown the most over the last 8 years. “Advisors should ensure that client preferences for communications are clearly understood and supported by the firm wherever possible,” Varas added.
Earlier this year, the organization conducted an online survey of 3,002 adults aged 18 or older and came up with these findings.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.

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