Lumiant, a leading advice engagement and client experience platform, has released new research. This research, conducted over twelve months and involving a sample size of 58,527 clients from America, Australia, and New Zealand, reveals the prevailing values driving clients' lives in 2023. The study underscores the significant emphasis on physical and financial wellbeing, highlighting the importance of a holistic approach to financial advice tailored to the client.
The research, aimed at understanding clients' core values and aspirations, reveals that the top value for clients in 2023 is to "Become more active and healthy." This finding underscores a growing awareness among individuals about the importance of prioritizing their physical wellbeing alongside their financial goals.
The Lumiant experience uses a values session to uncover clients' priorities. Advisors ask clients to rank a set of values in order of importance to them. Nearly 2,000 value sessions take place in America, Australia, and New Zealand, and the research identifies the underpinning values that define a client's best life.
In fact, there are significant differences between Australian and American clients. Australians are much more focused on their health and wealth, while Americans are more focused on their social connections.
Blake Wood, CEO of Lumiant, commented on the evolving landscape of financial advice, stating, “The financial advice industry is undergoing a significant transformation. In the past, the focus was primarily on wealth accumulation. However, we're now seeing a shift towards a more holistic approach that considers clients' values and life goals. The growing recognition that financial wellbeing is not just about wealth, but also about living a fulfilling life, is driving this shift.”
“Firms prioritizing this philosophy stand to gain: stronger referrals, higher retention rates, and increased revenue. Ultimately, it's about guiding clients toward a life rich in purpose and fulfillment - which our research reveals is about spending more time with those they love.”
Lumiant's advice experience encompasses eight dimensions of wellbeing, as identified by research from the University of Michigan. These dimensions include Emotional, Occupational, Physical, Social, Financial, Environmental, Spiritual, and Intellectual wellbeing. The study found that while Emotional wellbeing ranked highest among clients globally, there were notable differences between Australians and Americans regarding the importance placed on various dimensions.
Key insights from the research include:
Emotional wellbeing ranked highest globally, with clients rating it 7.9 out of 9 for living their best life.
Australians prioritize Occupational wellbeing, particularly concerning financial independence, while Americans place greater emphasis on Physical wellbeing.
Both Australians and Americans share concerns about financial peace of mind despite making limited progress in this area.
Australians are more connected to their environment, while Americans prioritize social activities and relationships.
Different Values for Different Generations
Furthermore, Lumiant's research explores generational differences in values and priorities. Gen Y wants to set up strong financial foundations, with “Feel more confident in my finances” and “Support and protect those I love” being their top two values—both of which are financial values.
When compared to Australians, Americans are more altruistic. The spiritual value of “Helping others live a more purposeful life” ranks in their top five (it’s number eight in Australia), while “Dedicate more time to those I care about” also moves up to number two in the rankings.
On the other hand, Gen X seeks a balance between work and family, with “Make work optional” climbing up five positions from Gen Y to make it in their top five. Financial values are still important to this generation, but the need for financial confidence is reduced, with “Support and Protect those I love” and “Become more active and healthy” taking the two top spots.
Yet again, Americans differ from Australians and the global average in seeking more time with their loved ones and nurturing family relationships. “Dedicate more time to those I care about” takes the top spot. The rest of their values are about enhancing their financial position to support those they love and spend without guilt while ensuring they are fit and healthy to continue to raise their families.
Last but not least, the Baby Boomer generation emphasizes health and wealth, with financial and physical values making up four of the top five value cards. The other card - “Nurture my relationships,” closes out the top five and shows the need to maintain good social connections in retirement.
This generation of Americans differs in that they also want to give back to their communities and society, with “Volunteer my time” being among their top five priorities.
The study underscores the practical implications of comprehensive financial planning that aligns with the client's values and aspirations. By understanding and addressing clients' core values, advisors can create more meaningful and impactful financial plans that enhance overall wellbeing. This means that financial advisors and wealth management professionals have the power to shift from a purely financial focus to a more holistic approach that considers clients' values and life goals, thereby enhancing the quality and effectiveness of their advice.
Wood believes taking a values-led approach to advice is the next stage in the evolution of advice, stating:
“We're witnessing a shift in the financial advice industry. Gone are the days of solely investment-focused strategies; instead, we're embracing holistic planning and fiduciary responsibility. Leading this transition are seasoned advisors, offering bespoke advice experiences honed over decades of practice. The problem is that $10.4T assets are at risk, with 38% of advisors eyeing retirement within the next ten years.”
“As the industry leans towards modeling and investment-centric tools, the essence of financial advice risks being overlooked—understanding clients and their life aspirations. At its core, it's about fostering relationships, uncovering clients' true desires, and crafting plans that resonate deeply.”
The study also highlights the importance of comprehensive planning, with clients setting an average of 5.3 goals per household. Notably, advisors leveraging Lumiant's platform have seen significant success in guiding clients toward achieving their goals and improving overall wellbeing.
Lumiant's research underscores the need for advisors to adopt a holistic approach that addresses clients' values, aspirations, and life goals. By understanding and aligning with clients' values, advisors can create more meaningful and personalized financial plans that enhance overall well-being. This research is a testament to Lumiant's commitment to providing the most relevant and impactful insights for the financial advice industry.
You can read the full report below for more information on Lumiant's research findings.
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