Many financial advisors dream of catering to the most elite investors seeking advice on how to invest their great fortunes. With thanks to the Spectrem Group, which surveys ultra-high-net-worth investors–those with $5 million to $25 million in assets to invest–on a quarterly basis, here is an inside look into the attitudes and characteristics of the denizens of elite advisors’ mahogany-paneled executive suites.
- The ultra-high-net-worth are young retirees, who amassed their great fortunes as managers, business owners and senior corporate executives. Their average age is 61; only 24% are still working full-time. The fully retired (63%) vastly outnumber the semi-retired (13%).
- Most of the ultra-high-net-worth seek the help of a professional advisor. A third of UHNW investors enjoy regular advisory relationships and another 27% seek an advisor’s help when events impel them to–for example, when they want to plan for retirement or diversify an overly concentrated portfolio after a corporate liquidity event. There is plenty of room for advisors form new relationships or expand existing relationships with UHNW investors. Fully 43% of UHNW assets are untended by advisors. And while UHNW investors express the highest level of satisfaction with their advisors (80% are satisfied), a smaller percentage (70%) were pleased
- How does an advisor impress one of these coveted clients? By being honest and trustworthy. That is the preference of 99% of UHNW investors choosing a new advisor; in comparison, only 83% said fees were a key concern, less than those who identified the advisor’s track record (93%), transparency and communication (93%) or depth of products and services (86%) as key criteria. Evidently, this is where an advisor’s reputation, built over many years, counts the most.
- How does an advisor lose his UHNW clients? Poor communications is the key reason identified by UHNW clients, including not returning phone calls in a timely manner (57%), not proactively contacting the client (49%) and not returning emails in a timely manner (42%). In contrast, not providing the client with good ideas and advice (49%) and long-term portfolio losses (29%) were of lesser significance. Most UHNW clients hear from their advisors on a monthly (49%) or semi-annual (33%) basis, and are satisfied with the frequency of the advisor’s communications tools (account statements, newsletters, face-to-face meetings, etc.). However, UHNW were less than impressed with the quality specifically of newsletters (23% satisfaction) and blogs (11%).
- How loyal are UHNW clients? Most (62%) have just one advisor. In the event an advisor separated from his firm, 60% of clients would follow the advisor whereas the safety and brand name of the firm would keep 40% of clients in their place. Two-thirds of UHNW are comfortable with the fees they pay their advisors, and they prefer fees over commissions by a two-to-one margin.
While little in this report should come as a surprise to those familiar with ultra-wealthy investors, the very low satisfaction with advisor blogs may provide the best clue as to how advisors may prospect among this client segment.