The shift from traditional defined benefit plans to defined contribution plans has changed the personal financial planning landscape significantly. Today, many individuals look to financial professionals such as advisors for guidance on establishing financial goals, investing, and identifying the right financial products for protection against an uncertain future. The services offered by a financial advisor are valuable.

One area we expect financial advisors to thrive is money management. However, the dynamic movement of the financial market is often beyond the control of a financial advisor. So is the inevitable recession. A little more than a decade ago we experienced the worst financial crisis since the Great Depression. Within our study we wanted to examine the client-advisor relationship during the financial crisis happened from 2007 to 2009. Surprisingly, clients were not firing their financial advisors even though their wealth was decreasing. Also, many individuals who experienced an increase in income sought out the services of a financial advisor.

Our result implies that financial advisors should focus more on commutation and relationship management to retain clients.

Guest Contributor: Yuanshan Cheng, Winthrop University

Read the full research: Factors Associated With Hiring and Firing Financial Advisors During the Great Recession from Cheng, Kalenkoski, and Gibson in the Journal of Financial Counseling & Planning, Volume 30, Issue 2.

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