(L-R) Danielle Labotka and Ryan Murphy

Emotional rather than financial decisions are the major reasons why people prefer to see a financial adviser, but research from Morningstar has found there needs to be nuance with how that is articulated.

The ‘Why do people hire their financial advisors?’ report from Morningstar in the US found 60 per cent of clients cited an emotional reason for hiring their adviser as opposed to 40 per cent who attributed it to a financial reason.

The report posited that although financial issues are a common driver of client hiring decisions, there is an “additional thread” of emotional drivers.

The findings came as a surprise to Morningstar behavioural scientist and report co-author Danielle Labotka who tells Professional Planner that the research team didn’t expect emotional factors to be the driver for a majority of people.

“What is commonly heard is that [clients will meet with] advisers because they have a specific financial issue that needs to be resolved, but what we see is that a lot of the times investors are coming to advisers because they don’t have the tools to do these things on their own,” she says.

Labotka adds that clients and investors approach advisers because they feel they cannot make financial decisions on their own.

“[This is] encouraging, because it means that people aren’t [necessarily] approaching advisers as some sort of way to get rich quick,” she says.

Morningstar global head of behavioural insights Ryan Murphy says clients and investors want to receive behavioural coaching, but advisers must be careful with how this value is articulated.

“What’s interesting is when you ask people what they’re looking for in a financial adviser, they almost never use that phrase [behavioural coaching], but it highlights the kind of emotional discomfort people have in facing financial issues and decisions,” Murphy says.

But he believes it is crucial for advisers to know behavioural coaching presents a substantial opportunity for them and their clients.