One of the top-line results of Janus Henderson’s latest Investor Survey was that close to 70% of respondents reported having a financial advisor and, among this group, 98% reported being very or somewhat satisfied with the quality of the relationship (see my previous article for more on this finding).

Beyond levels of client satisfaction, however, we were also interested in learning about key differences between advised and do-it-yourself investors. Specifically, we sought to answer the question: “Does working with a financial advisor offer benefits beyond investment advice?”

Confidence is key

First, we examined investors’ confidence in their ability to meet their financial goals: 32% of respondents reported having high levels of confidence, while 57% reported being somewhat confident. Only 11% reported having little to no confidence.

The key finding, however, was that having a financial advisor was statistically associated with higher levels of confidence compared to not working with an advisor. Possessing confidence is an important investor trait: Research has shown that investors with high levels of confidence are more likely to maintain a long-term perspective and stay the course during periods of market volatility.

Keeping emotions in check

Second, we asked respondents if their emotions have caused them to make investment mistakes. Nearly three-quarters said “no,” and these respondents were statistically more likely to have an advisor compared to not having an advisor.

Keeping emotions in check is critical to staying on track to long-term investing goals. Market research firm Dalbar consistently reports that investors underperform the broader markets by a wide margin.¹ This discrepancy is largely attributable to the emotional biases that cause investors to fall into the trap of buying high and selling low.

Action items for advisors

These findings from Janus Henderson’s latest Investor Survey provide strong evidence that the value of a financial advisor extends well beyond investment advice. Based on these findings, there are several actionable next steps for advisors to consider.

• First, ensure that your mission statement and/or value proposition includes phrases such as “provide peace of mind” or “reduce stress and worry.” These phrases will resonate with what many investors are really shopping for in a financial advisor: a coach, mentor, or confidant to help them maximize their overall wellbeing.
• Second, one of the fastest ways to build clients’ confidence levels is to improve their financial literacy. Mastering basic topics such as inflation, compounding, and diversification not only helps increase investors’ objective knowledge, but it also gives clients confidence in their ability to apply this knowledge.
• Lastly, incorporating techniques from the domain of psychology may help achieve better outcomes. One example is the theory of commitments, which states that, in general, people want to keep their promises. Advisors can apply this concept with clients by asking, “Can we agree that we will revisit your entire financial plan before making any wholesale changes?” If the client agrees, this pause helps create time and space to have a more rationale and thoughtful discussion at some point in the future.

If you would like more information about our Investor Survey, or the ideas outlined above, please contact our Wealth Strategists.

¹ “Evaluating the Gap between Fund Performance and Investor Returns.” Index Fund Advisors, August 2023.