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.

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.