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Clients in the UK and the US: More different than alike or more alike than different?

31 May 2018 | Garrett Harbron

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US and UK flags

About this time last year, Vanguard introduced our paper The evolution of Vanguard Adviser's Alpha®: From portfolios to people in the United States. It explored our vision of the future of advice, and what advisers need to do in order to remain relevant and profitable.

One of the more interesting (and controversial) findings of the paper was that clients don't care about portfolio returns as much as advisers tend to think they do. In fact, our research found that while advisers consistently ranked strong portfolio performance as a top client demand, clients said it was only about half as important as the quality of the client/adviser relationship, as measured by why clients left their previous adviser.

Performance relationship circle graph

Source: Vanguard.

Notes: Shows the results from a survey conducted of 4,000 advised US clients by Vanguard and Chadwick Martin Bailey. Clients were asked why they left their prior adviser; results are shown at the broad category level. See The Evolution of Adviser's Alpha: From Portfolios to People (Vanguard, 2018) for details.

Empathy, value and respect

Another surprising finding of the paper was that when it comes to what makes clients trust their adviser, how the adviser makes the client feel is more important than anything else.

Over half of the clients we polled told us that the single most important thing their adviser did to earn their trust was emotional in nature. Feeling valued and respected, that their adviser really understood their goals and objectives, and that their adviser empathised with their feelings were the most powerful drivers of trust in our survey.

Shortly after the paper was released, I gave a series of presentations to UK advisers in which we laid out some of the findings of the paper. As you might expect, reactions were mixed. Some readily agreed with our findings, saying they confirmed what they had experienced in their practices. Others were more sceptical and pointed out that clients in the UK may feel very differently about their adviser relationships to their US counterparts. What US investors want may not be the same as what UK investors want.

So, that raises the question: are clients in the UK and the US more different than alike or more alike than different? We've set out to find the answer to that question.

This summer, we're conducting a similar survey to the one we conducted in the US, but focused on UK investors and what they want from their financial advisers. At the same time, we're asking advisers what they think their clients want. The result, we hope, will be a comprehensive look at what's important to clients, what advisers are delivering, and where gaps in existing service models may exist. We also plan to provide some ideas and techniques to help fill these gaps, giving advisers tools to improve the value they offer, client loyalty and the profitability and competitiveness of the adviser's business.

Are UK clients more performance-oriented than their US cousins? Do Americans care more about emotional connections than UK clients? We'll be announcing our findings this autumn. In the meantime, we'll go into the findings of our US survey in more detail to provide context around our findings in future articles.

Are clients in the UK and the US more different than alike, or more alike than different? We'll find out soon!

If you enjoyed this article, make sure you sign up for Vanguard’s 2018 Symposium, where we’ll be discussing the future of advice.

Related:

The Advice Advantage: What your clients want

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Investment risk information:

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance is not a reliable indicator of future results.

Other important information:

This document is directed at professional investors and should not be distributed to, or relied upon by, retail investors.

This document is designed for use by, and is directed only at persons resident in the UK
The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so.

The information in this article does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this article when making any investment decisions.

The opinions expressed in this article are those of individual authors and may not be representative of Vanguard Asset Management, Limited.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

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