From the June 2007 issue of Investment Advisor • Subscribe!

The Good, The Bad, and The Supporting Data

The bad news first--wealthy investors don't have much loyalty to most brokerage firms, according to a recent national study by Cogent Research, Investor Brandscape: 2007, which reveals that about one-third of affluent investors (35%) are currently working with only one brokerage firm. Of the 65% of investors who work with more than one, about half are currently working with two brokerage firms. This leaves a considerable number of affluent investors who have active relationships with three or more brokerage firms (35%). While investors with a single relationship are giving close to two-thirds of investables to their brokerage firm, investors with multiple relationships give about half to their primary firm, with the remaining dollars being split among the others.

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The good news is that though investors are not loyal to any one firm, they are likely stick with the advisor with whom they have developed a strong relationship. When investors that work with an advisor were asked to rate the likelihood they would follow their advisor if he moved, only 8% say they would definitely stay with their current brokerage firm.

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