How family, friends shape financial advisor choices in post-pandemic India

Only one-third of the respondents have taken advice from a financial advisor while about two-thirds availed it from insurance agents. Only 29 per cent seek advice from independent financial advisors and only 15 per cent from mutual fund distributors while only 10 per cent from registered investment advisors, finds PGIM MF Retirement Survey 2023

Last week I’ve given the quick summary of the various aspects of the PGIM MF Retirement Survey 2023. The interesting insights about how the pandemic has changed the way Indians approached savings, investments and retirement planning. Not just the priorities and investments but the way they approached life has changed post the pandemic with 48 per cent of the respondents who underwent changes after pandemic, 100 per cent of them reported experiencing financial changes, 88 per cent reported they experienced behavioural changes and 78 per cent reported they experienced attitudinal changes.

In this article, I would like to elaborate the various insights in specific to what the respondents of the survey conveyed over the role of an advisor. The survey finds that only one-third of the respondents have taken advice from a financial advisor while about two-thirds availed it from insurance agents. Only 29 per cent seek advice from independent financial advisors and only 15 per cent from mutual fund distributors while only 10 per cent from registered investment advisors.

Also, interestingly, three-fourth of the respondents mentioned that they get influenced by family/friends (76 per cent) to approach an advisor. It’s followed by peers at workplace (47 per cent), TV ads/articles (35 per cent) and through social media (30 per cent). So, word-of-the-mouth is the greatest play for the advisor proliferation, albeit the slowest method.

The survey reveals that the role of an advisor per the majority is to generate better returns from their investment portfolios. This stands at 70 per cent versus 69 per cent responses from the previous survey. Other important expectations are reducing the risk of losses, helping them build diversified portfolios, reducing workload on managing money. The reduction of workload was sighted as an expectation has witnessed a significant change with more than half of the respondents, 54 per cent from less than a quarter i.e., 24 per cent in 2020.

In this era of information overload, investors are looking for a skilled advisor who can sift information from noise and provide them bespoke solutions all under one roof. Also, better accessibility (62 per cent vs 37 per cent), good qualification (52 per cent vs 24 per cent), being professional (34 per cent), assistance for online service (43 per cent vs 28 per cent) and provide multiple financial services (26 per cent vs 6 per cent) feature as important factors in consideration of an advisor per the survey.

55 per cent of the respondents think generating maximum returns is the best way to generate wealth. This view is common across those who’re not prepared for retirement and by the millennials. Responding to ‘worries related to managing finances post-retirement, only 34 per cent of them have reported having a trusted advisor this is a fall of 5 percentage points from 2020 i.e., 39 per cent.

Many respondents who have an investment plan are still not aware of the retirement corpus they require once they stop working. Amongst the 67 per cent respondents reporting having a retirement plan more than 50 per cent of them said that they have written down their financial plan for retirement. However, out of that only 16 per cent of them said that a qualified financial advisor made this plan for them. It suggests that majority of the Indians have not vetted their retirement plan with a qualified financial advisor.

This points to the need for more awareness around the approach to protection, savings and investment and the role of an advisor could play to facilitate an efficient financial plan incorporating both.

(The author is a co-founder of “Wealocity”, a wealth management firm and could be reached at [email protected])