How Investors View Financial Advisors?


A Public Opinion Survey

Dr. David Edward Marcinko MBA CMP™

Boston-based Dalbar company is a surveyor of financial information for the mutual fund industry. About a decade ago Dalbar released a nine-part survey on personal financial advice to measure the level of demand for advice that existed back then and to ascertain consumer preferences, expectations, beliefs, and sources for personal financial advice.

Now, please allow me to suggest that all FA colleagues use the results to evaluate your current practices and planed initiatives to determine how current thinking must change to meet today’s and tomorrow’s needs. And so, we now share some of the results of this survey.

Customer Expectations of Personal Financial Advisors

• Investors and prospective investors expect their personal financial advisors to educate them about investments and to minimize the taxes they pay.

• Unrealistic expectations present a major problem to personal financial advisors. The expectations for advisors to produce the highest returns, prevent investing mistakes, and avoid losses set the stage for disappointment in the future, thus undermining the public trust of advisors.

• Advertising, training, compensation, and industry practice is out of step with customer expectations. This survey indicates that emphasis in all these areas should be directed to vastly simplify education, increase use of tax saving strategies, and help investors to define financial goals.

Demand for Personal Financial Advisors

• Of the consumers surveyed, 89% report the need for a personal financial advisor for assets of $100,000 or more. This contradicts the notion that a growing number of people prefer to do-it-themselves. This finding presents the advisor with an opportunity: The demand for advice is higher than the market would suggest.

• The demand for advice, as measured by the Advice Demand Index (ADI) is highest among those who prefer to pay for advice through commissions. The ADI is highest for commission-payers at 93%, followed by those who prefer to pay a percentage of their assets (92.5%). Flat-fee payers have the lowest demand for advice, at just 88.7%.

Importance of Personal Financial Advice Functions

• Consumers unanimously agree that the ability of their advisor to provide clear explanations of investment alternatives, to be available when needed, and to keep them informed of their investment status are the most important financial advice functions.

• Consumers revealed that the delivery of a comprehensive written financial plan is the least important function that their advisor performs.


This report was not physician specific so one wonders how applicable it is to medical providers; especially the “no-desire” for a financial plan part?


And so, your thoughts and comments on this ME-P are appreciated. Are the results still valid today; or after the 2008-09 “flash crash”? Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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5 Responses

  1. 2011 Update

    Thank you for this excellet post, Dr. Marcinko. Now, did you know that Harold Evensky says financial advisors overestimate their competence and ability to predict the future?

    Well – no kidding!



  2. Dr. Marcinko,

    Insist that the financial advisor disclose all sources of compensation. Along these lines, it’s important that you don’t become confused by the intentionally tricky terminology used in the industry. Case in point: The difference between financial advisors who are “fee-only” and “fee-based.”

    “Fee-only” means an advisor is paid a flat fee – a percentage of the value of a client’s assets or an hourly fee. The compensation structure eliminates conflicts of interest because there’s no commission. “Fee-based” means an advisor takes fees and commissions. As you can see, these two terms sound alike, but have vastly differently meanings.

    When reviewing compensation sources, also ask the advisor if he or she accepts “soft dollar” payments – i.e., do they receive some benefit for referring products or services? The SEC requires that every registered investment advisor disclose these types of payments.

    Mike Davis JD LLM CFP


  3. What is Financial Advice?

    A difficult question, indeed.



  4. More banks may offer payday loans?

    Some big banks provide a product that’s not quite as loathsome as a payday loan, but it’s close, and it may become more widely available.



  5. Medical Colleagues

    In our world of ubiquitous financial information, it is easy to get caught up in short-term trends when thinking about our money:

    * What are the hottest stocks?
    * Which mutual fund managers have the best performance this year?
    * What is Jim Cramer telling me to sell today?
    * What is Suze Orman telling me to do this week?
    * What about practice management and the future of health 2.0?

    So, sign-up and enjoy this Medical Executive Post for free. And then, purchase our handbooks, white-papers and textbooks, dictionaries and journal for deeper information.

    Happy New Year 2012

    Prof. Hope Rachel Hetico RN MHA CMP™
    [Managing Editor]


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