Advisors to wealthy investors and family offices do not believe that “private clients of other firms have been well served by the industry,” according to 77% of those participating in a March 2010 poll of advisors to wealthy clients. The survey was conducted by the Institute for Private Investors (IPI), a membership organization that facilitates networking and education for wealthy families and their advisors.
Advisors are also taking a new look at risk as the financial crisis lingers, renewing their focus on “liquidity,” as well as “concentration risk,” and adding a new item to their priority list: “tail risk,”– risks of events that are deemed far less likely to occur than those that fall into the middle of a normal distribution of risk.
Advisors (31%), cited “Liquidity,” as an “Extremely Important” risk, according to the findings, released on May 21. Nineteen percent of participants selected “Concentration,” while 17% selected “Tail Risk” as “Extremely Important.” And 16% of the advisors participating cited “Inflation Risk,” and “Market Risk” as “Extremely Important.” Deflation was not included as a choice for this question. (Advisors were allowed to select more than one type of risk.)