August 14, 2015
If you are working with a financial advisor, how much do you value his or her input? If you were forced to choose, what would you be willing to give up instead of your financial advisor? Coffee? Dessert? Your doctor?
We admit that this is an odd question, but the folks at the insurance and financial services trade association LIMRA posed that very query to consumers. They found that of the twelve categories evaluated, only one was deemed more important than the financial advisor — the primary care physician. Even that was a close call, with the physician winning by a 52%-48% margin. We feel that wealth does not matter if you are too sick to enjoy it.
Before looking over the other options, we should point out how financial advisors were defined in the survey. The LIMRA page announcing the survey calls an advisor “a paid financial professional (e.g. insurance agent, lawyer, CPA, broker, financial planner, or advisor) used to make at least some of the household investment decisions.” That is a pretty large and diverse category.
With that in mind, let’s look at consumer preferences and the eleven categories that could not beat a good advisor. The numbers in parentheses show the percentage of respondents preferring the advisor to the category listed.
- Hairdresser/Barber (80%) – There are just too many places to get a good haircut or new ‘do.
- Favorite Dessert (78%) – Again, there are plenty of options to choose from, and too much dessert is bad for you anyway.
- Lifetime of Good Parking Spaces (76%) – In a pinch, you could always pay for a spot with money your advisor earned you.
- Favorite Television Show (75%) – Plenty of options. If your favorite show is on the Fox Business Channel, all the more reason to keep your advisor.
- Half of Your Current Wardrobe (73%) – If you are like most of us, you do not need half of your current wardrobe anyway.
- Favorite Sports Team (72%) – Not a tough choice for fans of the Tampa Bay Buccaneers.
- Coffee/Tea (66%) – We were surprised by this result. What if your advisor says to invest in Starbucks?
- Dentist (66%) – That is a tough call. Perhaps the extra money made through a financial advisor can be applied to oral painkillers and soup.
- $1,000 in Cash (64%) – This one seems like a no-brainer, as a good financial advisor can probably make you $1,000 with a single great piece of advice.
- Smartphone (63%) – Another surprising result. We would use our phone to call for financial help.
- Dream Vacation (58%) – We’ll just take a decent vacation instead of a dream one.
As fun and downright silly as some of these conclusions are, they drive home the point that people who use financial advisors really do value them and would have difficulties making sound financial decisions without them. Other LIMRA research has shown that approximately 80% of consumers sought the advice of financial professionals for life insurance and other financial products.
The explosion of online financial information has not harmed relationships with financial advisors. It may have actually increased the need, since consumers are overwhelmed with sometimes-conflicting information and financial advice that can be hard to distinguish from advertising. A trusted financial advisor can help explain the differences in financial products and guide consumers toward the best product for their needs.
Thank goodness that the folks at LIMRA did not ask us to choose financial advisors over relatives or spouses. We’re not going there.