The Advisor’s Guide to the 5 Personas Among Every Client Base | ETF Trends

How much money clients choose to invest with an advisor is often the result of underlying beliefs, emotions, and fears — as opposed to a rational process. 

“Our new behavioral study on the factors that drive wallet share revealed common traits that explain investors’ relationship with money — and, in turn, how they approach relationships with advisors,” Laura Hanichak Gregg, director of practice management and advisor research at FlexShares, wrote in a recent blog

Gregg wrote that using that research, the firm has identified five distinct personas that advisors will find among their client bases: protectors, competitors, collectors, verifiers, and simplifiers. 

Advisors who recognize their clients’ personas and the emotions driving their behaviors can use this information to better understand what their clients need to build trust and, in turn, feel comfortable giving a larger share of their wallets, Gregg wrote.

The key lies in identifying the common traits of each persona and using that knowledge to meet investors’ needs and desires, according to Gregg. “Once you understand the emotions that drive a client’s behavior, you can adapt your approach to yield better results,” Gregg added.

Advisors can unearth a lot of information by asking clients why they choose not to consolidate their assets with one financial advisor. 

“Asking clients why they haven’t consolidated their assets with a single advisor gets at some of the most relevant emotional and behavioral factors that define each persona,” Gregg said. “For example, your clients’ answers can reveal whether their decision is driven more by issues of trust and control or a desire to avoid risk or reach specific performance goals.”

According to Gregg, clients that respond by saying, “I don’t want to risk losing all my money, so I keep the majority of my assets in a money market account,” may be a protector. Protectors might be reluctant to share their full financial information.

Clients that fall into the competitor group may respond by saying, “I like to compare how advisors’ portfolios perform against the money I manage on my own.” Competitors tend to avoid conversations about long-term planning.

“I may consolidate someday, but I’m waiting to find the right relationship” is a response most likely given by a verifier. Verifiers are more likely to focus on long-term planning.

According to Gregg, collectors will likely respond by saying, “I don’t like having all my eggs in one basket.” Collectors may solicit opinions on the advice they’ve gotten elsewhere.

The simplifier’s preferred approach is to only work with one advisor because it’s easier to have everything in one place, Gregg wrote. Simplifiers are generally happy to delegate oversight of their investments.

Advisors looking for funds well positioned in the current economic environment may consider the FlexShares High Yield Value-Scored US Bond Index Fund (HYGV), the FlexShares US Quality Low Volatility Index Fund (QLV), and the FlexShares Ready Access Variable Income Fund (RAVI).

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