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Financial Planning > Charitable Giving

The Fidelity Guide to Attracting and Retaining More Millionaires

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“The rich are different from you and me,” F. Scott Fitzgerald once famously commented to Ernest Hemingway, to which the Nobel Prize winning author reportedly replied, “Yes, they have more money.”

It’s because they have more money that millionaires have been the target market for most financial advisors long before independent advice was born. Yet if the 2016 Fidelity Millionaire Outlook Study is to be believed, advisors may not understand millionaires as well as they think they do, including troubling disconnects between what services financial advisors say they are providing and the services that millionaire clients say they are receiving (see “How Advisors Can Get Referrals from Millionaire Clients” on

But first, the good news. My advice to advisors who read some of the avalanche of “studies” of the advisory industry these days is to always start with the demographics of who exactly is being studied. Survey results don’t mean nearly as much if the studiers are talking to the wrong people (believe me, it happens).

In this case Fidelity seems to have done its homework. It polled 1,287 millionaires who have a median income of $125,000 and investable assets of $1.75 million, including $750,000 in a workplace retirement fund. Sixty-two percent are debt free, 67% are men and 76% are married, with a mean age of 63 years, while 43% are still employed.

With a mean age of 63, a lot of these folks are well into their decumulation phase and not exactly the target market for most independent advisors. (Unless, you’re one of the IRA rollover “specialists” that the DOL is so concerned about.) But I would refer your attention to the fact that 43% of this group is still working: a median portfolio of nearly $2 million means that half of the whole group has portfolios larger than that.

I would suggest with more boomers working well past our 60th birthday in reasonably good health, perhaps the target market for independent advisors needs to be widened a bit.

Back to the study: 62% of those aging participants work with a financial advisor. However, of that group, only 25% fully “delegate their investment decisions to their financial advisor.” Of the remaining three-quarters, 33% “validate their own decisions by working with a financial advisor,” while 39% are “self-directed,” and the remaining 3% “validate with a digital advisor.”

Now for a bit of the bad news. The study’s authors segmented the surveyed millionaire (human) advisory clients into three groups: “Promoters,” who are described as “loyal enthusiasts who keep buying from a company and urge their friends to do the same” and comprise 55% of the participants; “Passives,” who “are satisfied but unenthusiastic clients who can be easily wooed by the competition” and comprise 25%; and “Detractors,” who “are unhappy clients, with high rates of churn and defection” and make up the remaining 20%.

Regular readers will know that I’m not a fan of cutesy names used in industry studies, but I have to admit these three groupings are pretty clear, and together paint a pretty sobering picture of today’s advisory firms.

As the majority of advisors and their firms rely on referrals for the majority of their new clients, it’s a bit disconcerting to hear that just a shade over half of the advisory firms’ clients polled (the Promoters) are inclined to be loyal and make referral recommendations. While the study reports “69% of Promoters gave a referral in the past year,” that’s only two-thirds of the 55% — diluted again by the (usually low) close rate on a given firm’s referrals. One can only believe that the retention rates for Passives and Detractors doesn’t paint a pretty picture either.

This suspicion is borne out through the rest of the study. For instance, Promoters indicated that they believe their advisor “has proved his or her worth over the past year” (91%); “depend on my advisor to keep me on the right track” (86%); and trust their advisor “to make decisions that are in my best interest” (93%). In contrast, 29%, 46% and 40% of Detractors agreed with those respective statements. This difference in attitudes about one’s advisor translated into a greater “share of wallet” (71% versus 48%) and a higher “likelihood to switch firms with the advisor” (62% versus 17%).

This data raises the question of what those Detractors are thinking staying with financial advisors they feel this way about. Yet it also offers a glimmer of hope in that at least these clients haven’t left their advisors, giving them a chance to change their Detractors’ minds.

From Detractor to Promoter

However, the first suggestion for retaining clients Fidelity offers is a bit of a disappointment. The survey found 44% of millionaires “don’t have (or don’t know if they have) a formal financial plan,” and that advisors may be overly focused on retirement planning while today’s clients are looking for assistance with “broader life goals, such as buying a home, taking an important vacation and saving for a child’s education.”

According to the survey, “Creating a financial plan, taking a holistic goals-based approach and actively communicating to stay top of mind are becoming table stakes.”

Really? Fidelity is just figuring out that comprehensive financial planning really works? I guess Boston is more of a foreign country than I originally thought.

With that said, the Fidelity study does do a nice job of demonstrating the effect of using financial planning principles to create Promoters out of Detractors. See Figure 1 for a snapshot of how Promoters and Detractors talked about the goals-based planning they receive from their financial advisors.

Figure 1: Goals-Based Planning, Promoters vs. Detractors (Fidelity Millionaires Study)

Promoters are more likely to say their advisor includes their spouse or partner (86% versus 60%) and children in financial conversations (46% versus 28%). Futhermore, 70% of Promoters say their advisor knows personal details about their life versus just 28% of Detractors. (Meanwhile, some 95% of advisors say they know their clients’ personal details.)

As many of these differences aren’t that large, one wonders why these folks remain Detractors. One answer might be that most Promoters are getting all of these services, while the Detractors who answered “yes” may be getting only one or two. That suggests that to be effective, comprehensive financial planning shouldn’t be offered as a menu with various services to be chosen from: It’s a comprehensive program that works best offered as a whole.

The effectiveness of comprehensive planning is also illustrated in the comparison of the advisory services used by Promoters compared to those used by Detractors (see Figure 2).

Figure 2: Services Received, Promoters vs. Detractors (Fidelity Millionaires Study)

The study also shows a striking disconnect between clients and advisors over the actual services provided. These are the areas that advisors say they consult on versus what millionaire clients say they receive: Career or job change (79% versus 20%); larger purchases or expenses (91% versus 32%); raising financially responsible children (73% versus 25%); health events (68% versus 28%); and changes in tax laws (85% versus 66%). There even seems to be a disconnect between advisors and millionaires about the status of their relationship. When asked if the advisors and clients are friends, 89% of advisors said yes versus 65% of Promoters, and 32% of Detractors.

The study also found that Promoters have access to more online capabilities. They have access to their statements, reports and financial records (79% versus 55%); to data aggregation tools that provide a total picture of their assets and liabilities (64% versus 26%); and to interactive or visual reports (52% versus 16%). A larger percentage of Promoters agree that their advisor helps simplify all aspects of their financial life, with almost three-quarters (74%) saying he or she does a good job of incorporating technology into the service offering, compared to just one-third (35%) of Detractors.

To move more of today’s millionaires from Detractors into the Promoter camp, advisors need to offer more comprehensive advice, listen to their clients’ view of the services they receive and create better online services.


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