Learning About the New Rules of the Game from Upshifting and Downshifting Investors

New attitudes of mid-career Accumulators to retirement and investing advice are not well understood by industry marketers and product designers. This is because industry strategists have been so focused on older investors, but also because the game is changing. Very few Accumulators are planning to “retire,” even as they recognize that a day when they can no longer work may come. Technology that empowers investors is finally being demanded in the “advisor” space. And awareness of advice-pricing value propositions will be accelerated by upcoming regulations on pricing disclosure.

Industry people want to sell “retirement”, but investors aren’t planning to retire. “Retirement” has typically been the starting point for engaging investors, but it may not be in the future. One key objective of this Explore series is to continue to advance our understanding of what financial goals will replace “retirement” as a key motivator for Accumulators.

An equally important trend is that the value propositions around advice service models and pricing are muddled. In past Explore series, Accumulators told us of their Screaming Unmet Needs for the industry: “tell me what you do,” “tell me how you get paid,” and “tell me how to evaluate you.” Who can blame investors for being confused? Brokers still compensated on commissions are positioning themselves as “advisors.” “Self-directed discount” brokerages are enriching their platforms with advisory products. Service models are changing without being clearly described, and few offer clear choices of how to pay for what.

Industry people want to classify investors in comfortable segmentations like “self-directed” or “advisory.” But people who like to be hands-on about their investing may want to hire a professional occasionally, and investors who don’t have the slightest interest in managing their own investments may still like checking their accounts on line, if only to see if their advisor is doing a good job. The already muddled service model-pricing value proposition is getting even more confusing; a new approach to understanding the investor is needed.

One solution to start sorting out the advice service model-pricing confusion is to study leading edge investors who are actively thinking about these dynamics. “Upshifters” are those investors who can tell us about their recent experiences actively seeking more support. “Downshifters” are those investors who, disillusioned with current offerings, are searching for solutions that are either more empowering or cost-effective than what they’ve experienced. And “Engaged & Staying Put” investors are actively using today’s services, and are reasonably satisfied. Together, these groups—and especially their reactions to the status quo and alternative advice-pricing value propositions—illuminate some fresh tactics for playing the new game.

Based on a series of focus groups with these investors, our latest Explore report Acquiring Mid-Career Accumulators: Positioning Advice and Disclosing Fees with Upshifting & Downshifting Investors qualitatively lays out the new rules of the game and provides guidance on actions that financial services executives can take now to improve positioning. If you’re interested in learning more about this research, and the new rules of the game, please review the brochure and feel free contact us to discuss how to best apply this research to your business. Laura