A new report has shed light on the main factors that shape an UHNW investor's decision when choosing a new advisor, as well as client referral trends, and the services that investors will most likely seek in the future.

Honesty and trustworthiness are the top qualities that ultra-wealthy investors look for when choosing a new advisor, followed by investment track record and that the individual comes with a strong referral, according to research by Spectrem.

The report - entitled 2015 UHNW Investor Advisor Relationships and Changing Advice Requirements - is based on answers from 596 ultra high net worth investors (those with a net worth of between $5 million and $25 million).

The fact that honesty and trustworthiness were ranked as the most important characteristics may not come as too much of a surprise given the nature and scope of advisors' responsibilities, which increasingly include not just finances but also sensitive life matters such as health and family issues. It is equally interesting to consider how investors rate by level of importance other attributes, many of which are regarded as what should be key elements of an advisor's value proposition. 

After the aforementioned (cited by 29 per cent, 20 per cent and 17 per cent of respondents respectively), investors were most swayed by: the individual being associated with a well-known brand or company (11 per cent); fees or commissions charged (9 per cent); "non-traditional" opportunities (5 per cent); website and online services offered (4 per cent); products from various companies (4 per cent); and use of social media tools (2 per cent).

It also emerged that the largest percentage (48 per cent) of UHNW investors found their advisor initially through a referral, reinforcing existing industry research that investors are seeking more feedback from sources, including existing clients, before they choose financial providers. With this in mind, a global study launched in June 2014 found that many wealth managers are missing out on a huge opportunity to acquire more clients because they simply aren’t asking for referrals.

That report pointed out that the propensity to recommend doesn't necessarily result in actual referrals, however, as they are triggered by a “complex blend of circumstances and financial behaviors and are heavily influenced by a client’s age and geographic background.” Indeed, according to Spectrem's latest research, younger investors were most likely to have been referred by their parent or friend, while older investors were referred most often by a business associate.

"The youngest investors are the least likely to recommend their advisor," Spectrem said. "However, the youngest UHNW investors have the highest average net worth, and therefore, are not a segment to be ignored. This segment of the UHNW have higher expectations of their advisors and are generally much less satisfied with their advisors than their older counterparts. It is critical that advisors stress their value with these investors to maintain and grow these relationships."

Besides referrals, other means through which an investor was introduced to their current advisor include (but to a significantly less extent): proactive advisor contact (11 per cent); seminars/events (6 per cent); investigating a product and the advisor specialized in that product (4 per cent); general advertisement (3 per cent); and website (2 per cent). Of note, social media was cited by 0 per cent of respondents.

Meanwhile, the top reason UHNW investors would fire their advisor, according to the report, is due to the advisor not returning phone calls in a timely manner, as cited by 69 per cent of respondents. (Over half expect a return phone call or e-mail within 12 hours, Spectrem said.) The other biggest advisor firing catalysts mentioned were, in order of importance: not returning emails in a timely manner (56 per cent); not providing good ideas and advice (55 per cent); that the advisor is under-performing compared to the overall stock market (41 per cent); the advisor doesn't understand the investor's risk tolerance (41 per cent); and the advisor is too investments-focused (33 per cent). View more on the topic of what makes investors switch advisors here.