Morningstar CEO: Investors Not Seeing Value in Advice

What You Need to Know

Investors did indicate a key area where advisors shine, Morningstar CEO Kunal Kapoor said.
Morningstar analysts consider the market undervalued.
AI should be a game changer for advisors, Kapoor suggested.

Investors, especially those who haven’t worked with an advisor, have trouble seeing the value in financial advice, Morningstar’s CEO said this week, citing a new study by the research firm.

Morningstar, which polled more than 2,000 people nationally for its “Voice of the Investor” study, found participants rated advisors “as providing similar value to investment or trading platforms and only slightly above financial media,” CEO Kunal Kapoor said in a keynote presentation Tuesday at the firm’s annual investment conference in Chicago.

That response was surprising, Kapoor said, explaining that the insights don’t mean investors see no value at all in financial advisors.

“So, I did a little bit more digging into the data, and what we found is that where we see the value of advice shining through is in boosting clients’ understanding of risk management,” he said, according to a speech transcript.

He explained that “42% of investors in our study work with advisors, and 90% of those investors said that they find advisors to be extremely valuable because advisors are personalizing the risk experience for them in a very tangible manner.”

The study is not yet available for distribution, according to Morningstar.

Among other topics, Kapoor also touched on artificial intelligence, saying applying AI to the industry should put advisors “in a position to provide a much better investing experience and do that at scale.” He introduced conference goers to the firm’s new AI character, Morningstar Moe, which is connected to the company’s research and data.

“He is loaded up only with the financial information from Morningstar that we all know we can trust,” the CEO said, asking Moe several questions.