New research from Cerulli Associates and the Securities Industry and Financial Markets Association found that 78% of U.S. households with $100,000 to $1 million in assets use a professional advisor in some way. Most of them — 74% — said they would recommend their advisor, and 77% said their advisor was worth the cost. In fact, only 1% stated they were dissatisfied.
“It was shocking to us,” said Scott Smith, Cerulli’s director of advice relationships, on how few investors were unhappy with their advisors. He added that what differentiated advisors was trustworthiness, dedicated relationships and personalized advice.
To widen the swath of U.S. households for the study, Cerulli looked at those who had investable assets of $100,000 to $1 million, or “everyday working Americans,” Smith said. That asset level represented 33 million U.S. households, or 26% of the U.S. population. This group also relied more heavily on the advice of their advisor than wealthier peers, the study noted.
Further, this group controlled more than $11 trillion in investable assets, over 23% of the U.S. total. The study included 401(k) advice providers in the mix.
Also, advisors shouldn’t fear automated advice taking over the business. In fact, 38% of investors said they would need more personalized financial planning advice in the future and lack of human interaction was a primary obstacle to digital relationships. Advisors should instead use automation for basic services to leave more time for personal interaction, the study advised.
Breaking It Down
The study also looked at how the $6.5 trillion in individual wealth that this segment of the population held in securities firms broke down:
These investors had 48 million relationships with securities firms, or just under 1.5 per household. The average account size was $135,309.
Of the total $28.6 trillion in investable assets, the biggest share was held on direct platforms such as Fidelity or Schwab: $7.1 trillion. Next largest was funds held by wirehouses: $6 trillion. independent RIAs held $2.6 trillion, IBDs held $2.5 trillion. Hybrid RIAs held $1.7 trillion.
A similar pattern was found of those with $100,000 to $1 million in investable assets: $2.2 trillion was held on direct platforms, $754 billion at wirehouses, $953 billion at IBDs, $568 billion at indie RIAs and $567 billion at hybrid RIAs.