Close Close

Portfolio > Asset Managers

Why Wealthy Clients Switch Advisors; What They Plan to Do Before Rate Hike

Your article was successfully shared with the contacts you provided.

A new study from Spectrem Group finds that more than half of high-net-worth investors have switched financial advisors within their lifetime. Plus, close to a quarter (23%) of affluent investors say they have changed advisors within the past five years, and 11% of Millennials have fired their advisor in the past 12 months.

Why the moves? Wealthy investors cite a lack of proactive ideas, and less wealthy investors point to the absence of frequent contact. “Younger investors are also more likely to believe an advisor should provide information via mobile technology and understand social media,” Spectrem explained in a statement.

For investors who like to be involved in their portfolios and enjoy investing, the likelihood of switching advisors is higher than for those who have less time or interest in investing. About 90% of wealthy investors review their accounts on a regular basis, and almost three-quarters (72%) keep up with financial and economic news.

“This research offers key insights to providers about attracting and keeping investors,” said Spectrem Group President George H. Walper, Jr. “It underscores that investors are looking for proactive advisors who stay in contact with them in addition to offering new investment ideas and forward thinking.”

Investor Pulse

Morgan Stanley Wealth Management’s latest Investor Pulse poll, indicates that 62% of retail investors and 75% of millionaires expect the U.S. Federal Reserve to raise interest rates by the middle of next year. Among respondents predicting a rate hike, 38% looked for an increase of 0.5% and 24% a rise of 0.25%. Fourteen percent were unsure of the magnitude.

Morgan Stanley says it surveyed 1,000 U.S. households with at least $100,000 in investible assets, one-third of which had investable assets of $1 million or more, over the summer. These individuals were asked what actions they planned to take ahead of a possible rate increase: 55% of respondents, including millionaires, said they were not changing fixed income allocations, selling real estate investments or otherwise fine-tuning their investment portfolios.

(At the same time, 19% said they had paid off consumer debt, 11% had bought a car or other big-ticket item and 10% had refinanced a mortgage.)

Investors appear mixed in their view on whether a rate hike could be good or bad for the economy: 31% say good, 24% bad, 23% neither good nor bad and 22% unsure. According to the poll, 57% of respondents had at least some concern that prolonged low interest rates had produced a consumer asset bubble, but only 12% said this was a major concern.

Investors’ economic outlook was positive. Seventy-six percent of survey participants expected the global economy to be the same or better over the next 12 months, and 78% had this expectation of the U.S. economy.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.