Wealthy Investors Say They’re Happier With Their Advisors: IPI Study

Partnering with their clients appears to pay off for advisors

It depends on your point view: Nearly three years after the onset of the financial crisis, 63% of ultra high-net-worth investors are “fully satisfied” with their advisor relationships, whereas 95% of advisors find their firm’s clients are fully satisfied. The Institute for Private Investors (IPI) uncovered this gap in perceptions in an April survey of investors and advisors released Thursday.

Charlotte Beyer, IPI’s founder and chief executive, said in a statement that investors today are taking a much more active role in overseeing their investments and those who are working in partnership with their advisors report greater satisfaction.

“We are seeing a clear trend toward engaging in more of a partnership with the advisor, a natural evolution as investors learn more about due diligence in the aftermath of the financial crisis,” Beyer said. “Investors are realizing they cannot abdicate the ultimate responsibility for overseeing their wealth. At least for ultra-wealthy clients who have taken a more active role, the relationship is on a solid footing. Advisors have longer-lasting relationships with investors who wish to be a partner in a dialogue.”

The IPI survey, “Both Sides Now: Perceptions of the Advisor-Investor Relationship,” also demonstrated a growing trend among investors of diversifying across multiple firms. Sixty-nine percent of investors said they relied on a primary advisor for overall advice. While 50% said they relied on one firm, 19% said they used more than one firm in the role of primary advisor.

The latest IPI study also revealed evidence of change in the industry, especially as related to fees and transparency. In a 2006 survey, IPI found that investors were less confident that the industry served them well, expressing doubts in particular about advisors’ ability to explain fees. Respondents feared they were paying for services they did not use, or paying more for services they did use, and had no way to know for sure. Most frustrating to them, according to the past study, was the lack of comparability and transparency of advisors’ fees.  

In this year’s study, 68% of investors agreed that their advisor had open, transparent and fair fees, building from the finding six months earlier in 2010, when 81% of investors agreed that “I trust my advisor to act in my best interests.”

Other highlights of the IPI survey include the following:

  • 74% of investors said their advisor was responsive to their requests, 66% agreed that their advisor had a deep understanding of the family’s goals, 63% said their advisor spent sufficient time with them and 59% agreed that their advisor is proactive in meeting their needs
  • 95% of advisors gave their own firms an overwhelmingly positive appraisal, agreeing that their firm “produces results in concert with our clients’ families’ goals and risk parameters”; 92% said their firms provided access to top-notch professionals, firms and opportunities; and 98% said their firms used full resources for the benefit of clients and client families
  • 63% of investors agreed that “my advisor produces results in concert with my family’s goals and risk parameters,” with 17% disapproving of their advisors’ performance; 65% said their advisors used the full resources of the firm to benefit their family; and 59% were satisfied with the access provided by their advisors.

“If the selection process was sound and based on the investor’s clearly articulated goals, the advisor will likely be retained in the rough times of market gyrations,” Beyer said in the statement. “While investors are happier, the take-away for advisors is that they should not be complacent about their client relationships.”  

IPI provides educational and networking resources to its national membership of 1,100 ultra high-net-worth investors. The organization operates as an independent U.S. subsidiary of Campden Media, a global business with offices in London, New York and Singapore.

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