US investors' willingness to pay for advice on the rise

The need for financial advice is rising and investors are willing to pay for it, despite the pricing pressure in the wealth management space.

Cerulli's latest research, US Retail Investor Advice Relationships 2020: Accentuating the Value of Advice, shows that 82% of adviser-reliant clients believe the advice they are receiving is worth the price. Cerulli expects the costs of underlying investments to continue to decrease while advisory fee levels remain more resistant to erosion.

Demand for financial advice is also climbing. A full 40% of investors surveyed in 2020 say they need more advice than before and 56% are willing to pay for it—up from 51% in 2019. "Current conditions have created a nearly perfect environment to expand the role of truly comprehensive financial advice relationships," says to Scott Smith, director. "Investors are weary from the ongoing pandemic and pursuant economic challenges and are willing to engage in paid advice relationships."

Investors have become weary of the ongoing Covid-19 crisis and economic challenges and are willing to engage in paid advice relationships, said Scott Smith, director at Cerulli, adding that this is the perfect environment to expand the role of truly comprehensive financial advice relationships.

And advisers are stepping it up and proving their value."Increases in satisfaction during the uncertainty brought on by 2020, paired with very small increases in dissent, suggest that investors are content with their advice relationships, the report said, and that the quality of advice has remained high, noting that 80% of investors express satisfaction with their current advisor, and just 1% indicate dissatisfaction.

Connecting digitally with clients is the next crucial step in the evolution of financial advice, according to the report. 

"To become a leader in next-generation advice, platform providers must ensure that their starting point is a client experience that tracks a path of least resistance through which incremental elements can be added based on client demand," concludes Smith.

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