Northwestern Mutual’s
Tim Gerend On How Advisors Earn And Keep Clients’ Trust
Q + A
We’ve seen evidence that Americans are placing more trust in financial advisors versus other sources of financial advice. Why are more people turning to advisors to help them achieve financial security?
It’s no surprise that Americans turned to professional financial advice at a greater rate amid the turmoil of the last year and a half. Our research shows that the market volatility and economic downturn caused by the Covid-19 pandemic was a major factor influencing individuals to seek out professional financial advice. Nearly 38% of Americans work with a financial advisor—a significant jump from the pre-pandemic level of 29%. The pandemic brought financial worries to the forefront, driving many to take action and seek help to ensure their families will be protected now and into the future.
We know that many people at all levels of wealth experience stress and anxiety when it comes to their financial lives. One company provides your retirement plan, another your brokerage account, another your insurance. It’s a fragmented landscape, and it’s a lot for people to manage on their own—and when people are overwhelmed, they are less likely to take the right steps to build financial security. One of the most important roles a trusted advisor plays is replacing that feeling of anxiety with empowerment and confidence.
A trusted advisor can help clients cut through the complexity, empower them to take action and strengthen their confidence to seize their financial future. Advisors work to integrate all aspects of a client’s finances, including risk management, retirement income planning, investment management, tax and estate planning and more.
What changes in client behavior have you seen since the pandemic started, and how are your advisors responding?
Since the pandemic began, we have seen a lot of change in how our clients work with us. Clients have been leaning into digital tools just as they have in so many other facets of their lives. This was happening before the pandemic, but it accelerated significantly as people took steps to reduce in-person contact. Many clients became comfortable with virtual client meetings literally overnight. But the flip side of this is that the advisor-client relationship remains a key to success. Particularly in the last year, people have been turning to their financial advisor for guidance, understanding and perspective in a way that only a person-to-person connection can deliver.
It all adds up to advisors needing to offer the best of both worlds when it comes to technology and personal relationships, and it’s incumbent on us to equip our advisors with the tools and resources they need to deliver a comprehensive and holistic approach on the client’s terms.
We’ve also seen clients taking steps to get their financial house in order. People are more apt to seek advice. They are saving more, reducing debt and looking for help beyond just investment management. The importance of risk protection and reducing financial vulnerability is more top of mind for clients in a highly uncertain environment.
Our clients are also taking action and getting started with financial plans with a greater sense of urgency. We’ve attracted record numbers of new clients, and we placed a record amount of life insurance in 2020. On top of that, our retail investment business has seen record net cash flows as clients consolidate their assets with us. All this underscores that they see value in an advisor who can help them see and make sense of their complete financial picture, now and in the future–allowing clients to protect and prosper.