Advisors Bringing Maximum Value

The latest OnDemand Research from DALBAR’s Business Technology Division reveals that mutual fund investors employing the use of financial advisors are enjoying supreme value from their firms’ digital offerings compared to their counterparts that do not use advisors. Investment companies generally offer a wide range of analytical data and educational resources on their websites in an attempt at providing investors maximum insight into their accounts and expanding their investment knowledge. While the use of these resources is clearly optional, paying for them is not. All investors fund the research and technology that is needed in order to populate these websites with account breakdowns, educational articles, market commentary, and calculators in the form of administrative fees and sales charges. Completely disregarding them is tantamount to wasting the money that the investor is paying to cover those expenses, an act that is being repeated over and over again by uninformed investors that do not work with financial advisors.

Working with a financial advisor undoubtedly leads to more active website engagement from the investor. Nearly half of investors working with an advisor access their accounts online on a daily basis, whereas roughly half of investors without an advisor never go online to access their accounts. Investors without advisors are actually slightly more likely to check their account balance online, but investors with advisors are far more likely to make use of the other account analytics that are available to them such as checking their account activity, performance, asset allocation, and viewing account documents.

Nearly 90% of investors using advisors feel that it is either important or critically important to track the performance of their account online compared to half of investors without advisors who feel the same. 

Since nearly three-quarters of mutual fund companies provide one-click access to investment performance information, often available in easy-to-interpret graphs or tables, not making use of this information reveals an astounding lack of basic investment understanding and is particularly wasteful of client account fees.

The knowledge discrepancy between investors that use advisors and investors that do not is particularly evident when studying each group’s attitude toward their rate of return. 85% of investors using advisors view their rate of return as either important or critically important. Only 42% of investors without advisors feel the same and half of them do not even know what rate of return represents.

Comparing and contrasting these figures tells a simple story: 

having a financial advisor in your employ leads to increased engagement with your investment company’s website, which in turn leads to a more educated investor.

Speaking of education, the often innumerable educational resources posted on company websites are consumed by over 60% of investors with advisors, which is three times the figure of investors without advisors that take the time to peruse them. Investors without advisors make even less use of online market commentary, with barely a tenth partaking as opposed to 58% of investors using advisors that go to the trouble of reading what the experts have to say about current and future market trends.

The objective of investing in a mutual fund is to obtain the greatest value possible from your investment. The vast majority of investors that are not using financial advisors are starting out behind the 8-ball by gaining little to no value from the portion of their investment that funds the resources that are available on the company website. DALBAR’s research shows that most investors that entrust their accounts to financial advisors are not passively standing aside, but are squeezing every possible dime out of the administrative fees they pay by consuming as much investment knowledge and insight as their investment company’s website can throw at them. These thoroughly engaged investors can boast more than just the advantage of having a financial advisor on their payroll … they have another industry expert on their side staring right back at them when they look in the mirror.  

  • By Luke Tobin
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  • 5/29/2019
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  • 2
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  • Categories: Advisors