Bruce Springsteen is a titan of rock music, but he generally isn’t considered a modern-day prophet. Yet his 1992 hit song “Human Touch” resonates with an undeniable foresight when it comes to the current state of the wealth management industry. The lyrics speak to a fundamental human desire for connection, a longing that seems to echo louder in today’s world of increasing digitization.
“I just want someone to talk to / And a little of that human touch / Just a little of that human touch.”
The sentiment succinctly captures a significant shift in expectations within the financial advice industry – moving from a transactional, performance-related interaction toward a more meaningful, multifaceted relationship. Next-generation heirs, high net worth (HNW) retirees and business owners are no longer satisfied with traditional, investment-only advisory services. They crave a more personalized and holistic approach to financial guidance, incorporating a host of various disciplines including tax planning, estate planning, philanthropy and even health care planning for their golden years.
The benefits of offering a comprehensive roster of services can serve to increase client retention and loyalty, while also helping RIAs to potentially attract new clients.
Building Deeper Connections
Recent research underscores this ongoing transformation in client expectations. A 2024 McKinsey & Company report indicates that the demand for holistic financial advice has surged, climbing from 29% of respondents expressing interest in 2018 to nearly half (47%) by 2023. This notable uptick reinforces the fact that clients are no longer satisfied with a singular focus on investment allocation and performance.
Clients are no longer satisfied with a singular focus on investment allocation and performance.
The same McKinsey report highlights that 17% of clients now value tax preparation as an essential component of their advisory experience. This points to an increasing need for advisors to either collaborate with, or employ, CPAs to enhance their service offerings. By doing so, firms can meet the growing complexity of their clients’ needs, while simultaneously fortifying their competitive edge in the market.
Fidelity’s 2023 RIA Benchmarking Study further emphasizes the necessity of incorporating tax planning into client services – revealing that a staggering 83% of firms managing under $1 billion in assets have already integrated tax strategies into their practices. It’s a clear signal that such services are becoming table stakes rather than optional extras, enabling advisors to forge deeper relationships with clients and cultivate greater trust and loyalty.
Comprehensive insight into their clients’ full financial lives can empower advisors to tailor their advice to unique individual circumstances, creating a more personalized and impactful experience. These singular client stories can also serve as powerful tools when it comes to referral generation.
By showcasing an ability to address diverse financial needs, advisors can attract prospects who may be seeking a more integrated approach to their financial planning. This strategy may enhance client retention. It can also lead to an increase in referrals as satisfied clients share their positive experiences.
Don’t Be Left In The Dark
A holistic approach to wealth management aligns advisors with continually evolving client expectations, potentially creating stronger, more enduring relationships. Advisors who can provide that “human touch” – integrating expertise across multiple disciplines with specialized attention for each financial goal – may increase the stickiness of their clients, becoming indispensable partners in their clients’ financial journeys.
A holistic approach to wealth management aligns advisors with continually evolving client expectations, potentially creating stronger, more enduring relationships.
This shift not only increases client retention via deepened relationships, but it can also open new avenues for attracting prospects through referrals due to an integrated value proposition. Firms that choose to ignore this trend may find themselves “Dancing in the Dark” when it comes to future growth, since the ability to offer that human touch may very well define their future success.
John C. Pastore, Jr. is Executive Vice President, Private Wealth Advisor at Integrated Partners, a national financial planning firm and RIA.
