Advisors Losing ‘Significant’ Ground With Wealthy Clients: Spectrem

‘Wealthy investors are relying less on advisors despite the fact that the majority are retired or approaching retirement’

A just-released survey by the Spectrem Group on how wealthy investors feel about their advisors should served as a wake-up call for advisors.

The new report, Relationships with Advisors, found that advisors have lost “significant” ground with the mass affluent, millionaires and the ultrahigh-net-worth. For instance, just 73% of ultrahigh-net-worth investors, who have between $5 million and $25 million in net worth, not including their primary residence, say they are satisfied overall with their financial advisor, down from 80% in 2011 and 81% in 2010.

In comparison, 72% of millionaire investors, with $1 million to $5 million in net worth, are satisfied overall with their advisors, up slightly from 70% in 2011 and 2010, the survey found.

More mass affluent investors, those with $100,000 to $1 million in net worth, are satisfied overall with their advisors than in years past, but the number is still below the other wealth segments: 69% in 2012 versus 66% in 2011 and 61% in 2009, according to Spectrem Group.

George H. Walper Jr., Spectrem Group president, said in a statement that “advisors clearly are not moving the dial in the right direction when it comes to satisfying enough of their clients. Perhaps even more telling than satisfaction levels, more than one-quarter of affluent investors in all three wealth segments think they do a better job of investing than their advisors.” These findings, he said, “should be a wake-up call that advisors need to step up their game to attract and retain such important clients.”

Spectrem Group conducts monthly surveys with 1,500 wealthy investors on a variety of topics. Questions were taken from multiple months with affluent investors who qualified for the report.

In what amounts to another “lukewarm vote of confidence” by investors with $100,000 to $25 million in assets, just about half are likely to follow their advisors to a new investment firm, and those numbers are down from last year:

  • 52% of ultrahigh-net-worth investors in 2012 compared with 60% in 2011
  • 55% of millionaire investors in 2012 versus 61% in 2011
  • 50% of mass affluent investors in 2012 compared with 59% in 2011

When asked about specific products and services, wealthy investors were generally satisfied with the frequency but less complimentary about the quality:

  • Face to face meetings:  Just 51% of ultrahigh-net-worth, 54% of millionaire and 53% of mass affluent investors rated them excellent
  • Financial plans: 44% of ultrahigh-net-worth, 45% of millionaire and 42% of mass affluent  investors rated them excellent
  • Newsletters: 24% of ultrahigh-net-worth, 28% of millionaire and 22% of mass affluent investors rated them excellent

“Wealthy investors are relying less on advisors despite the fact that the majority are retired or approaching retirement,” Walper said. “To reverse this trend and develop loyalty, advisors need to demonstrate sophisticated, in-depth knowledge about taxes, financial planning and related issues while working more collaboratively with investors who may well have identified investing opportunities on their own.”

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