The BNY Mellon firm commissioned Harris Poll to conduct a “web harvesting” study, examining the text appearing on 84 financial advisor websites belonging to firms on Barron’s Top 100 Independent Wealth Advisors list.

Additionally, 600 interviews with high net worth investors - defined as those with at least $1 million investable assets excluding real estate and retirement accounts – were conducted online. Of those, 60 per cent agreed that “all advisors say the same thing,” pointing to a significant opportunity for advisors to truly differentiate themselves by revamping their value proposition and giving themselves more height in what has become a very crowded industry.

A value proposition is typically regarded as a business statement that summarizes why a consumer should buy a product or use a service.

Recognition of the value of marketing in wealth management has increased significantly in recent years, despite the sector being very elusive historically. In particular, many players are thinking hard about how effective their marketing strategies are in terms of attracting and engaging with the next generation of investors.

“There is something about the finance world and the need for investors and advisors to be the same,” says April Rudin of The Rudin Group. “There is a strong, palpable discomfort with stepping outside the box and differentiating from what everyone else is doing.”

Rudin adds: “Messages like 'we have been in business for 100 years' may resonate with Baby-Boomers, but those same messages are turn-offs to younger generations whose preferences are to eschew big, opaque brands for newer, hipper, more nimble and more accessible firms and people.”

Investor perspective

Many of the value propositions that appear on advisor websites contain information about the attributes of the firm, rather than the benefits to a client, Pershing notes in the report, entitled What Do Top Advisors Say and What Do Investors Really Think? A Study of Advisor Value Propositions.

It found that the most commonly-used value theme among advisors is that they “develop solutions that meet your needs,” while many showcase their firm’s attributes but ignore any client benefits.

From an investor's point of view, three main themes were cited as the most compelling in terms of how they judge an advisor’s value proposition. They were: tailored solutions that meet their needs; that advisors work in their best interests; and that they will have access to experienced investment managers.

“The trouble is, these themes are also among those most frequently used by advisors,” Pershing said. “In fact, it’s possible that investors rate these themes so highly precisely because so many advisors repeat them. The claims have become an expected part of an advisor’s pitch.”

Meanwhile, despite that many advisor websites feature phrases such as “relieve the burden,” it emerged that these propositions are rated as low in importance by most investors. In fact, they “accept the need to take an active role in managing their own finances,” Pershing said, adding that investors generally feel that such statements “oversimplify the complex realities of personal finance.”

That said, the report notes that while conservative approaches are indeed sought after by investors, such investment strategies are “undersold by advisors who offer them.” The financial crisis may seem like some time ago, but investors are still wary – and this is also reflected in their qualms associated with which firms to trust.

“Advisors and other financial professionals should realize that the investing public is still struggling with a lack of trust in the financial sector,” Pershing said. 

The study found that the highest-rated value statements, as identified by investors, combined four elements into a single statement to include: characteristics of the advisor, such as a firm’s size or years of experience; what the investor gains as a result of working with the advisor; a rational explanation of how the firm’s attributes produce benefits for the client; and language that evokes a feeling.

“The highest-ranking value statements in stated importance include all four elements,” Pershing said. “Those at the bottom of the list typically contained only two or three elements - and especially failed to link emotional and rational arguments, or veered toward either the overly specific or the overly simplified.”

The decision-making journey

The study also shed light on which value statements are important to investors at first, and those that are given greater weight when it comes to making a final decision.

In response to an open-ended question, investors named three considerations much more frequently than any other. They were: integrity, expertise and understanding of needs.

But when forced to make a choice between firms, certain value statements beat all the alternatives. They were: “we help you reach your goals with tailored solutions that meet your needs”; “we focus on capital preservation and income”; “we built our firm on integrity and trust, because doing what is right for you is better for our business in the long run”; and “we are accountable to our clients—we say what we do, and do what we say.”

In terms of when it comes to making a final decision, it was found that statements such as “we are committed to open communication, guaranteeing you a personal response to every call or e-mail within 24 hours” are less important to investors than “we take a conservative approach to help you live comfortably today and protect your legacy for the future.”

Of course, preferences will vary, as the study found, according to specific investor demographics - one example being that younger investors and ultra high net worth investors care more about ease and simplicity compared to older investors.

In the words of Pershing: “'Table stakes' promises are important to every investor. After that, however, different promises appeal to different market segments.”