Do you know why clients make the decisions they do when investing? Behavioral psychologist might not be in your job description as a financial advisor—but perhaps it should be added to the list, alongside the more traditional tasks such as portfolio manager and investment strategist.

It is an important job you do—helping your clients to save and invest for homes, college educations, retirements, and more. The role you play in securing Americans’ financial futures is remarkable because of the breadth and depth of technical knowledge required. You need to understand not only a bevy of investment strategies and products but also, in many cases, financial, tax, estate, and philanthropic planning. And yet, even mastering all these subjects—as difficult as that would be—would not necessarily maximize the odds that your clients will reach their goals. To do so, you must understand your clients as people and communicate with them in ways that motivate them to act in their best financial interests.

As an industry leader, Vanguard recognizes that understanding the behavior of your clients is vital in helping them realize their goals. To help make that understanding clearer and easier for you to come by, we’ve introduced Advised investor insights™, an ongoing proprietary research series for advisors that provides actionable insights on investor behavior. In the first installment, you’ll learn How investors select an advisor. The affluent investors included in this study are not limited to investors who entrust assets to Vanguard but are a representative sample of all wealthy, advised investors in the United States.


Our initial Advised investor insights report speaks to two themes

Psychographic and behavioral factors drive advisor selection.

In other words, investors choose with whom to work based on things such as their sense of their own investment knowledge and their desire to work with an advisor whose personality appears compatible with their own. Demographic factors, such as age and gender, or asset levels appear less important. Based on these findings, we identified five profiles of advised investors and suggested how you can deepen your relationships with clients of each type—it’s an approach you can use to complement your current segmentation strategy.

The critical role of referrals

As you may have found, a prospect who is referred to you is likely to become a client—and a loyal one at that. Interestingly, and perhaps counterintuitively, we found that the source of a referral was not particularly important. A recommendation of an advisor’s services carried about the same weight whether it came from a prospective client’s neighbor, good friend, or accountant.

Look for more of this practical content in the future. The next report in this series will explore the factors that influence investors’ trust in advisors. Thereafter, we’ll consider how advisors promote positive investment behavior—a natural follow-up to our Vanguard Advisor’s Alpha® research, which demonstrates the value that behavioral coaching can deliver.

We invite you to leverage what we’ve uncovered in our research as you work toward a better understanding of your clients. Greater understanding fosters deeper relationships. And with the trust that engenders, you’re in a better position to anticipate and meet your clients’ needs.


advised investor insights video link