Study Shows Gap Between What Advisors Say and What Resonates with Investors

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By Vittorio Hernandez | August 28, 2014 12:08 PM EST

A new study by Pershing Square, a unit of BNY Mellon company, showed that an effective value proposition strengthens audience connections and fosters growth, yet many advisors have had little objective guidance in formulating such statements until now.

REUTERS/Rick Wilking
Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009.

In the study titled, What Do Top Advisors Say and What Do Investors Really Think?, it reveals how an advisor can communicate their  value proposition to investors and differentiate themselves from other advisors in the industry.

A unique value proposition answers the critical question "Why should I choose you?", yet according to the survey, 60 per cent of investors say that many advisors make similar promises, making it difficult to distinguish between them. The strongest value propositions incorporate these four key elements:

  • attributes of the advisor;
  • benefits for the investor;
  • a rational explanation of how the firm's attributes benefit the client;
  • and language that evokes emotion

"Developing an effective value proposition can have larger implications on an advisor's overall business than they may realize," says Kim Dellarocca, managing director at Pershing. "In many instances, the value proposition is the first impression potential clients experience and can be the catalyst for a future relationship. It is also an opportunity for advisors to promote business growth by using language that differentiates themselves and targets their ideal client base by articulating attributes and features that appeal to specific demographics. Of course, the real test is delivering on what you promise."

Choosing the right language can make a big difference for investors. Pershing's study found that investors prefer value statements that incorporate "comprehensive" over "holistic" by a ratio of seven to one. Additionally, two topics that investors care about most - conservative investment approaches and trust - are under-represented in most value propositions.

Dr Joseph Louro, chief executive officer of Red Bank, New Jersey-based investment education company InvestView (OTCQB: INVU) cited the importance of communication between investors and advisors and added that  investment education is important to better understand market trends and make money from investment opportunities.

Louro said in the company Web site, "It is our opinion that now, more than ever before, it is critical that the individual investor come to understand the forces that influence the marketplace. We specialize in assisting common investors through this process by offering them the tools, training and confidence that is required to successfully navigate the market in these trying times."

Based on a systematic look at the value propositions used by top advisors, and investor reactions to these and other value propositions, Pershing has identified key takeaways for advisors to consider when creating a value proposition of their own.  They are as follows:

Include core promises-but add more. Investors found three themes to be the most compelling among advisors' value propositions: tailored solutions to meet their needs, advisors working for the investors' best interest and experienced investment managers. An advisor's website and marketing materials should include these top promises.  Advisors who do not mention these in their value propositions risk being excluded from consideration by potential clients. Successful advisors also need to include something extra to differentiate themselves, such as why investors should choose them over other advisors or unusual client benefits like building a family legacy or understanding personal aspirations.

Don't oversell simplicity. Many websites promise to simplify investing and relieve clients of the burden of managing wealth, but according to Pershing's study, most investors accept the need to take an active role in managing their own finances.

Give conservative approaches more prominence. If advisors' money management approaches place special emphasis on preservation of capital, it should be a highly visible component of their value proposition.

Work hard to establish trust. Trust remains a much bigger concern for investors than the financial industry realizes. Advisors must ensure their value propositions include a message on why investors should trust in them and includes themes like trust, accountability, integrity and fiduciary responsibility.

InvestView, Inc. provides and delivers a comprehensive online program of investor education: proprietary investor search tools and trading indicators, weekly newsletters as well as access to live weekly Trading Rooms. It delivers subscription-based financial education courses through InvestView's website. InvestView also allows new retail investors to use the portal's subscribed information on a 2-week trial period for $9.95.

The company does it through its online education, analysis and application platform that provides analysis, tools, education solutions and an application. InvestView's web-based tools were designed to simplify stock research and improve the investor's research efficiency. One such tool is the Market Point, which is made up of five sections, namely: Charts, Stock Watch, Market, Calendar and Campus.

InvestView offers five training courses that provide an incredible education in the stock market. The five InvestView courses build upon each other. Beginners should take them in the suggested sequence, while more seasoned traders may jump right into the more advanced topics that they are craving to better understand and give them the edge as a successful trader. Each course is offered via live webinar and as a recorded on-demand videos that is immediately posted at the end of each webinar. For more information, please visit their web site

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(Photo: REUTERS/Rick Wilking / )
Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009.
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