Julie Jason:

Financial advisers: Perceptions vs. reality.

As we discussed last week, 80 percent of widows ( and 75 percent of divorcees) use financial advisers, according to “Widows and Divorcees: Empowering Women in Transition,” a 2018 Spectrem Group report. Spectrem surveyed divorced or widowed women with at least $ 500,000 of net worth, not including their primary residence.

What type of adviser did these women use? Spectrem identified 15 types, including accountants, lawyers and family friends. Financial professionals spanned 11 types. Here is the breakdown ( combining both widows and divorcees):

1. Full- service broker ( 37 percent)

2. Attorney ( 22 percent)

3. Accountant ( 18 percent)

4. Independent financial planner ( 18 percent)

5. Independent ( registered) investment adviser ( 14 percent)

6. Investment manager ( 11 percent)

7. Banker ( 10 percent)

8. Insurance agent ( 8 percent)

9. Discount broker ( 6 percent)

10. Mutual fund company representative ( 6 percent)

11. Friend or family member who is not a professional ( 6 percent)

12. Private banker/ bank trust officer ( 5 percent)

13. Other professional adviser ( 4 percent)

14. Robo- adviser ( 2 percent)

15. Family office representatives ( 1 percent)

That’s quite a list of possibilities. Exactly how did those surveyed make their decisions? The survey gives us some insights — and as you might guess, trustworthiness topped the list. The other responses also were telling.

When grouping them together, this is what the survey found about choices:

1. 33 percent: Individual is perceived as being honest and trustworthy.

2. 16 percent: Individual comes with a strong referral or recommendation from a trusted associate.

3. 13 percent: Investment track record of adviser.

4. 11 percent: Fees or commissions charged.

5. 11 percent: Individual is associated with a well- known brand or company.

6. 10 percent: Adviser offers products from a variety of different companies.

7. 4 percent: Individual offers nontraditional opportunities and wealth management capabilities to meet needs.

8. 2 percent: Use of social media tools such as Facebook and LinkedIn.

9. 1 percent: Website and online services offered.

If you notice, none of the criteria has any relationship to the regulatory landscape or is based on an assessment of the stan- dard of care owed to the client. From my perspective as a professional money manager and lawyer, I wonder why legal duty of care is not front and center.

I believe that consumers — male and female — are unaware of the differences between advisers, and the differences go far beyond perceptions. Most importantly, consumers are unaware that standards of care vary based on the regulatory structure that applies to different advisers.

I also find it telling that some of the women surveyed ( 1 of 5 widows and 1 of 4 divorcees) did not have financial advisers. Why not? The most common reason ( 75 percent of widows; 36 percent of divorcees) was “the belief that an adviser would not be looking out for their best interests.”

Aha. Did these respondents realize something that those who had advisers did not? Just how could one know whether the adviser you want to hire is dutybound to put your interests ahead of his own?

Again, going back to my personal views as a lawyer and the principal of a federally regulated entity, I can tell you that the answer lies in the law.

It so happens that regulators are diving into this very issue right now. Because they would like public feedback on proposed regulations of financial advisers next month, I will return to this subject soon.

In the meantime, write to me with thoughts, comments and questions (readers@juliejason.com).

Julie Jason, JD, LLM, a personal money manager ( Jackson, Grant of Stamford) and author, welcomes your questions/ comments ( readers@juliejason.com). Her awards include the 2018 Clarion Award, symbolizing excellence in clear, concise communications. Her latest book, a curated collection of Julie’s columns, is “Retire Securely: Insights on Money Management From an Award- Winning Financial Columnist.” To hear Julie speak, visit www.juliejason.com/ events.