Skip navigation
retired-ladies-pool.jpg Ronnie Kaufman/The Image Bank/Getty Images

Firms Not Offering Tax, Retirement Planning Are Getting it Wrong

Advisors are overdelivering services such as health care, estate and business planning, while falling short in the areas their clients most desire.

Nine in ten investors want their advisors to help with tax planning and three-quarters want retirement planning services, according to research released Wednesday by financial advisory consulting and research firm Herbers and Company. Yet only 73% are offering tax help and just 67% provide retirement planning.

Advisors instead appear to be overestimating the demand for certain services—dramatically, in some cases. Business and education planning, along with employee benefits, demonstrated the largest disparity, with more than 40 percentage points between investor interest and the number of firms providing those services.

Herbers collected data throughout 2023 from more than 720 firms with between two and 23,476 clients, as well as 1,600 consumers with at least $250,000 in assets to learn what services clients are looking for and who’s providing them, as well as what the fastest growing firms are doing differently and how advisors define 'comprehensive' wealth management.

“There’s no real definition of comprehensive,” said CEO Angie Herbers. “That was the most interesting data point out of all of this.”

Among the 77% of advisors who said they provide "comprehensive" services, there were 250 different definitions of what that means. The most common response was investment management and retirement planning, with investment management the most common service offered across all respondents.

For firms looking to expand, Herbers recommends starting at the top of the list and adding those capabilities that are most in demand among the broadest range of potential clients.

“If an advisory firm really wants to grow, then we're not going to tell them go out and build a niche. We're going to tell them to go out and beef up their retirement planning services—and tell people what they do specifically in retirement planning. They need to be out there telling potential clients what they're doing in tax planning or find partners to help them in that area.

“Most advisory firms do it backwards and say they’re going to go after a particular type of client,” she said.

While it's unsurprising that firms enjoying the highest rates of organic growth convert more prospects, at 73%, the close ratio across the rest of the sample drops to a third. Just 22% of potential clients end up joining firms that are actively engaged in M&A, which represented just 5% of survey respondents. Meanwhile, only one in ten prospects are becoming clients of firms that lead with life planning.  

“There are certain subsets of advisory firms that use life planning, or the psychology of financial planning, in the wrong place,” said Herbers. “Those things belong in the client relationship after the client has closed, instead of using it upfront to close the client.”

Potential clients typically seek advice to solve a specific need and are rarely, if ever, asking for help with their own general psychological issues around finance, she said.

One key difference discovered between growers and all other firms is the way they view their own service offerings and client experiences. The majority of top organic growers (63%) are unsatisfied with what they're offering compared to others firms, while only 36% of respondents feel they’re providing a “below average” experience.

“Growers believed that their client service was the worst, versus all other firms believing that their client service was the best,” said Herbers. “So, the point that we're trying to make here is that when you start to believe that your client service is the best, you aren't focused on client service, consumer demands, improving your client experience, you're focused on something else. And, if you want to organically grow, then the focus should always stay first on client experience and client service.”

The study also found that investor interest in investment management has dropped, reinforcing Herbers’ thesis that diversification of services is necessary for growth, while the desire for advice around crypto and other alternative investments has increased beyond the number of firms able to provide them.

None of the respondents in the study offer crypto investing, desired by one in ten clients, and while a third provide alternative investments, nearly four in ten clients want access. In all other areas of investment management—stock option analysis, SRI, real estate and portfolio diversification—advisors are offering more than the consumer is demanding.

“Advisors just don't have enough education around crypto, and as a result of that, they're just not going to give the advice,” Herbers said. “But, whether or not you believe crypto and alternatives belong in investment management services, you can no longer give a hard no to clients around them without a better explanation.”

Pointing to the success of some crypto ETFs over the last year, compared to the larger market, she predicted that consumer interest will only increase over the coming years.

For firms that can’t afford to add a bevy of additional services and would prefer not to sell to a larger, scaled acquirer, Herbers said she believes industry partnerships are the most likely path to remaining relevant and attractive options to potential investors.

“Unless you're a large firm and you have both capital and intellectual capital, it's going to be very difficult for you to add all of these services,” she said. “That’s just the bottom line. And if you're a small firm and you have the majority of these services, to grow and get bigger and maintain all of those services will be somewhat difficult.

“It’ll probably take years, but I think the industry is going to end up being big firms that are offering everything and then thousands of mid-sized to small firms that are working together.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.