The Top 3 Reasons Why People Do Not Have a Financial Advisor

It is estimated that 35% of American adults work with a financial advisor (Statista 2022). Thus, two-thirds of the population represent a potential opportunity to be helped with financial services and a source of growth for Registered Investment Advisors (RIAs) and other wealth management professionals.

Understanding Consumers

Understanding the reasons why consumers do not have a financial advisor is a first step toward overcoming the barriers for converting a prospect into a client. To help financial institutions understand consumers' attitudes, beliefs, and fears regarding investing and financial advisors, Psympl partnered with Ipsos in August 2024 to conduct a comprehensive study of consumers' approaches to investment and financial management. 

Psympl's Study 

This online study involved n=3,000 respondents mirroring the U.S. Census (i.e., demographically and socioeconomically representative) with a comprehensive survey covering a variety of topics regarding financial investments, the role of financial advisors, and many topics related to wealth management.

The survey asked respondents whether:

• They currently work with a professional financial advisor or wealth manager
• They EVER worked with a professional financial advisor or wealth manager

Reinforcing the results of the Statista data cited above, the 2024 Psympl study found that 34% of adults ages 18+ in the U.S. currently work with a financial advisor. but 45% of have EVER worked with a financial advisor. This 11 point difference indicates that 25% of consumers who once had a financial advisor discontinued these services, and may represent an even bigger challenge for conversion.

Study respondents who were not currently working with a financial advisor were asked:

Why do you NOT have a professional financial advisor/wealth manager?

Respondents were presented with 15 reasons, including 'other' (open-ended for the respondent to provide a unique reason), and asked to select all reasons that apply. Reasons were randomized for each respondent.

The Top 3 Reasons People Do Not Have a Financial Advisor

The Top 3 reasons people do not have a financial advisor (by % of respondents selecting that reason) are:

• I don't have enough money/assets to work with a professional financial advisor/wealth manager (31%)
• My finances are not complex enough to require a professional financial advisor/wealth manager (26%)
• I enjoy managing my money/assets myself (24%)

The top reasons may seem obvious, but less than a third of respondents chose them, indicating there are many different reasons why people don't have a financial advisor. No two prospects are alike and a one-size-fits all approach to addressing these barriers through marketing and financial management services will fail to maximize prospect interest and conversion. 

Difference of Opinion by Segment

A method for understanding psychological differences among a population is psychographic segmentation. Psychographics pertain to people's attitudes, values, beliefs, fears, personalities, and lifestyles, which are core to their motivations and priorities. Psychographic segmentation groups people according to these shared characteristics. A primary objective of Psympl's market research was to identify a psychographic model that explains consumers' decision-making processes and investment behaviors. Psympl identified five distinct psychographic segments for financial services:

Segment 1, Segment 4, and Segment 5 agree that the primary reason they do not have a financial advisor is, "I don't have enough money/assets to work with a professional financial advisor/wealth manager," though this attitude is felt most acutely by Segment 4, as 46% of this segment chose this reason, while only 26% of Segment 1 felt this way.

The top reason for Segment 2 and Segment 4 is, "I enjoy managing my money/assets myself," at 31% and 35%, respectively. Unique to Segment 2 in their top reasons is "I want to maintain fast and easy access to my money" (22%), Tied at #3 for Segment 3 are "Professional financial advisors/wealth managers charge too much for their services (fees, commissions, and transaction costs)" and "They may not have my best interests in mind" (21%).

Tied at #3 for Segment 4 are "To avoid investment scams" and "It is intimidating to give a stranger control of my money" (16%). Looking beyond the Top 3 reasons, Segment 5 indicates:

• I don't see any value in working with a professional financial advisor/wealth manager (20%
• I don't trust professional financial advisors/wealth managers (or it's too difficult to find someone I trust (19%)

Personalized Messaging to Overcome Objections

Different psychographic segments prioritize different reasons for not having a financial advisor, Armed with this insight, an RIA, wealth manager, or financial institution can focus on content and messaging that have a higher likelihood of overcoming prospect objections. Each psychographic segment requires unique engagement strategies (i.e., content/wording, channel(s), communication frequency) to appeal to them and activate desired behaviors. 

Psympl Psychographic AI^TM enables financial advisors to leverage psychographic insights and automated content generation for enhanced client engagement and wealth management personalization.