Advisers need to work to remove small irritants clients experience: Morningstar

Investment advisers should work on removing small irritants to their clients that could have significant detrimental consequences to their businesses, Morningstar’s global head of behavioural insights, Ryan Murphy, told his company’s investment conference in Sydney.

Thursday, May 22nd 2025, 6:11AM

by Jenny Ruth

A survey Morningstar conducted of 399 paying clients of investment advisers in the US found that only about 6% had been so disengaged with their advisers that they terminated the relationship.

But Murphy said that doesn’t mean that the remaining 94% of clients were satisfied with the service their advisers were providing.
“Staying with you isn’t the same as being engaged with you,” Murphy said.

Morningstar’s research asked these clients to rate 15 different factors that the US-based financial services firm thought could be possible irritants in their relationships with their financial advisers.

The clients were asked to rate each potential irritant on a scale of one to seven, with one representing their major irritation, four being neutral and seven representing their total satisfaction with their adviser on that factor.

Depending on their answers, they were asked followup questions.

For example, if clients were irritated by their adviser asking them to make referrals to other potential clients, they were asked how often their advisers asked for referrals, from rarely to often, and then they were asked to rate their emotional responses to such requests, including the impact on their decision to continue working with that adviser and how it impacted how much they trusted the adviser.

It turned out most clients were happy to be asked for referrals and were not at all irritated by this.

However, it turned out what most irritated clients was that their advisers took more than a week to complete a task, with 70% rating that an irritant.

Murphy said he thought that stemmed from clients’ misunderstanding of the investment process and he suggested that could be turned into a positive if the adviser let the client know how long a particular process was likely to take.

He suggested advisers create a kind of map of the investment process to let clients know what to expect from each step in the process and how long things were likely to take at each stage.

And he recommended that advisers use checklists to ensure they deliver each client the full advisory process they ought to receive.

Some might object to checklists, but professionals performing critical functions from surgery to airline pilots do use checklists as part of their process to ensure their patients or passengers are kept safe, Murphy said.

Morningstar’s survey showed that 55% of respondents had been irritated by an inadequate explanation and breakdown of the fees their advisers charged.

Murphy suggested a way to catch and correct such irritants is to email clients a simple form a couple of days after their first consultation as a way to ensure the clients had understood what they’d been told and to fill in any gaps with questions such as did the client understand the advice, did the client feel the plan addressed their financial goals, had the adviser used any jargon that the client hadn’t understood and was the client happy with the details of the advisers fees that had been provided.

But the secret with such forms was to keep the questions to a minimum – the survey found 77% of respondents had been irritated by being asked to complete long and complex forms, Murphy said.

“There might be more irritation in your client base than you’re aware of,” he cautioned.

“The greater the irritation, the less likely a client will recommend an adviser to others.”

Other things to head off at the pass were that the adviser should try to ensure they understand what the client’s financial goals are – the client may not understand their goals fully and may often say what happens to be top of mind, rather than what they really want to achieve financially, Murphy said.

One way an adviser can deal with this is to outline to a client the likely consequences of what their stated goals are – for example, if they say they want to achieve aggressive returns, an adviser might point out that would require a heavy weighting towards equities and the short-term risks of volatility and longer-term benefits of such a strategy.

While most of those surveyed were aged 40 or more, there were some younger respondents and the survey responses didn’t alter with age, they were mostly wealthier and better educated than most and also tended to be more financially literate, Murphy said.

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