The firm notes in its latest quarterly issue of The Cerulli Edge – Advisor Edition that investors use family and friends as sources in “the retail version of the request for proposal process common in institutional markets.” With that in mind, Cerulli urges advisors to view that initial client meeting as such and use it as an opportunity to highlight their value.
Once they make the initial contact with an advisor, investors assess a variety of factors to determine whether the advisor would be a good match, including reputation, quality of service and fees.
According to Cerulli, only 11% of households cite referrals as the reason for beginning relationships with advisors. Investors place greater importance on reputation, with 13% of U.S. households citing it as the primary reason for initiating new advisory relationships. Reputation is especially important among investors over the age of 80 and among those in their thirties. One in three investors 80 and older and 19% of investors between the ages of 30 and 39 cite reputation as the reason for beginning relationships with primary providers.
Quality of service is also a deciding factor, as important as referrals. More than one in 10 households (11%) cited quality of service as the reason for choosing advisors.