A new survey by The Million Dollar Round Table (MDRT) highlights a significant gap between how financial advisors rate themselves and how clients rate their advisors.
The MDRT Financial Harmony Study also revealed that consumers rank “Honesty†(39%) and “Trustworthiness†(29%) above “Delivers Results†(19%) and “Knowledge†(13%) as the most important traits for advisors.
The online survey asked U.S. consumers to rate their financial advisor/professional in terms of “Honesty,†“Trustworthiness,†“Knowledge†and “Delivers Resultsâ€; and asked financial advisors to rate themselves across the same attributes. [Please see below for survey methodology.]
Clients gave their advisors an overall score of 7.7 out of 10 in terms of “Honesty†while advisors gave themselves a 9.2. Advisors also rated themselves higher than clients rate their advisors in terms of “Trustworthiness†(8.3 vs. 7.6); “Knowledge†(8.4 vs. 7.8); and “Delivering Results†(8.4 vs. 7.4).
The MDRT Financial Harmony Index (FHI) Score for 2011 is 66. This index measures how consumers rated their advisors across these four important attributes; how advisors rated themselves on the same measures; and the size of the gap between the two ratings. Complete harmony between clients and advisors as well as perfect client satisfaction and advisor self-rating scores would be indicated by a score of 100. MDRT will track the FHI annually and work with members and the profession to better align advisors to current consumer attitudes and perceptions.
“The MDRT Financial Harmony Study should be a wake-up call for any advisor who thinks they are in perfect harmony with their clients,†said MDRT President Julian H. Good, Jr., CLU, CLTC, ChFC. “The findings reinforce the need for financial professionals to pay more attention to the relationship side of the advisor-client equation, working to better earn clients’ trust by demonstrating professionalism, ethics and integrity in their approach and interactions.â€
According to the research, advisors and consumers also differed slightly in terms of the most important trait. While consumers ranked “Honesty†first (39%) followed by “Trustworthiness†(29%), advisors ranked “Trustworthiness†first (41%) and “Honesty†second (29%).
“While ‘honesty†and ‘trust’ are similar, they are not really the same,†said Matt Thornhill, founder and president of the Boomer Project, which conducted the research. “Advisors need to realize they need to create opportunities to earn trust. Trustworthiness is an outcome of a solid advisor/client relationship, good communication, ethical behavior and, ultimately, honesty demonstrated over the long term.â€
The survey also uncovered differences in the harmony scores between advisors and members of various generations. “Financial harmony appears to get better with age,†said Good. “Older consumers and advisors are closer to a perfect FHI of 100 than are younger consumers.â€
Generation/FHI Score
Silent Generation (ages 66-80) – 74
Boomer Generation (ages 47-65) – 66
Generation X (ages 29-46)- 65
Millennial Generation (28 and under)- 62
According to Good, MDRT will provide its members with a variety of exclusive educational tools and resources based on the Harmony Index, including an online tuner members can use to survey their clients to determine their own FHI, see how they rate vs. other advisors and identify areas for improvement.
About the MDRT Financial Harmony Study:
The MDRT Financial Harmony Study is based on online surveys of U.S. consumers and all financial advisors conducted by the Boomer Project and BIGresearch in April 2011. The consumer survey was conducted among adults 21 to 75 years old who currently use any financial advisor; 1,451 respondents were targeted with an overall margin of error of +/-2.6 percentage points. The advisor survey was conducted among 312 financial professionals. The surveys were not conducted specifically with MDRT members/their clients.
