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10 reasons to invest in face-to-face advice over online

Bryce Sanders

In times when investment returns are low, reducing expenses can sometimes make the difference between profit and loss. A popular strategy to reduce costs is to eliminate the middleman, which is what makes online investing so appealing. But this approach will not eliminate the need for financial advisers, because investing big money involves face-to-face relationships.

Trading, investing and banking online offers convenience – people can access their account 24 hours a day. If a client has a question that requires a response from a live person, that is no problem – tiered service can reduce waiting times for an advisory firm’s best clients. Virtual investing might require upfront investment in technology, but it saves the expense of high street offices along with salaries and commissions for advisers based there.

Interacting online also has its drawbacks. Online dating is a good example where things are not what they seem, and few people would go online to get medical, legal or accounting advice. Online investing makes sense for people who know and understand what they are doing. It is an excellent vehicle for investors who want someone to follow instructions and execute trades.

But the role of the financial adviser is far from dead. When people part with large sums of money or make important decisions, they prefer to do so face-to-face – it is easier when the advice comes from someone who knows and cares about you. Consider the following 10 reasons why a face-to-face advisory relationship is superior to online investing:

1. People make judgments. Before accepting advice most investors want to size up the other party. In politics, countries’ leaders meet at summits and look one other in the eye. Former UK prime minister Margaret Thatcher famously said of her Soviet counterpart, Mikhail Gorbachev: “This is a person I can do business with.”

Why it is important: many people need to determine informally whether the adviser is knowledgeable and has their best interests at heart. You will need to meet them.

2. Bricks and mortar. Buildings imply stability and a commitment to the community. Investors like to see hard assets such as property. It makes them feel their assets are “secured”.

Why it is important: investors want to see a parent firm with deep pockets before they entrust their money to an adviser.

3. Longevity. Established firms in familiar surroundings communicate stability. Knowing that the adviser across the table has a long-term career with the firm puts clients at ease.

Why it is important: the adviser is the face of the firm in the community. They assume a long, successful career is built on doing the right thing for their clients year after year.

4. Referrals. People often refer their friends to a firm because they have had a good experience or got a good deal. Something might be on sale, but it is more likely people are referred to individuals who made a process go smoothly.