Mass Affluent’s Top Reason for Picking an Advisor

How much has that changed? In the latest survey, 81% of mass affluent investors ranked companies’ reputations as the most important factor when choosing where to make their investments—that’s more important than investment risk level (80%) and diversity (78%).

In 2010, just a year ago, risk level, at 79%, was the most important thing to them, followed by reputation (78%) and diversity (76%). But in 2009, the most important thing to the mass affluent was performance (97%), with impact on taxes coming in at 82% (compared with

70% for 2011) and social responsibility at 53% (fallen to 43% in 2011). In fact, in 2009, reputation wasn’t even an option in the multiple-choice question. Says Wynn, "These were much higher than what we’re seeing now."

Back to those self-directed mass affluent: Wynn says that there are 27.8 million households with $100,000 to $1 million in net worth, not including primary residence. That amounts to 24% of households in the U.S. And they are, according to the data, more likely than not to rely on themselves to make investment decisions. Over one-third of mass affluent investors (38%) are completely self-directed, say the data, while another third (32%) turn to an advisor only for advice as a result of a specific event. The report suggests that could be a combination of reluctance to trust someone else to manage their money and hesitation over fees.

With such a large potential advisor market going untapped, Wynn suggests advisors "point out [to these unadvised individuals] that the fees they pay and upfront costs will be recouped by increased returns in the future, and an increased sense of confidence that their money is safe." Showing them that their money is "building for the future in the most reliable way," says Wynn, and even presenting them with a cost benefit analysis, can lead to an entrée into a wide-open field.