A recent Cerulli report on retail investors finds that clients are working with an average of 3.6 financial professionals. That figure jumps to 4.2 and up for those with $500,000 or more in investable assets. Plus, these average figures unexpectedly rose from 2012.
While this isn’t the news that researchers—and advisors—anticipated, the trend can be seen as an opportunity, rather than as simply a threat. “Investors are looking at different ways to diversify not just their investments but also their [financial service] providers and where they hold their assets,” said senior analyst Roger Stamper of Boston-based Cerulli, in an interview.
One market segment that presents a good opportunity for advisors and other providers are investors ages 50 to 59, Stamper notes. In this group, close to 25% of investors are looking, or at least are open, to increasing their level of paid financial advice.
“That’s a sweet spot,” Stamper said. “And when you take into account the amount of rollovers, for instance, there is a significant amount of dollars at play.”
High-net-worth and ultra-high-net-worth investors have an average of four relationships with investment providers. “Wealth provides many investors with the privilege of benefiting from institutional products and prices across asset managers, and it also grants them the ability to leverage their status among providers and advisors,” said Donnie Ethier, associate director at Cerulli, in a statement. “High-net-worth investors continue to steadily diversify their advice providers.”
On the other hand, high-net-worth investors seem “reluctant to terminate existing relationships,” Ethier explains. “In fact, nearly one-quarter of high-net-worth households report their primary provider controls at least 90% of their investable assets.”
Cerulli experts have thought many recent relationships between investors and financial professionals came about from “a short-term desire to validate or compare current providers, or even as a short-term spread of assets to maintain FDIC-insured accounts in the wake of bank failures.”