Surveys

UHNW Investors Less Satisfied With Their Advisors Than A Year Ago - Spectrem Study

Harriet Davies Editor - Family Wealth Report October 11, 2012

UHNW Investors Less Satisfied With Their Advisors Than A Year Ago - Spectrem Study

The number of ultra-wealthy investors who are satisfied with their financial advisor has fallen over the past year, according to Spectrem Group.

The number of ultra-wealthy investors who are satisfied with their financial advisor has fallen over the past year, according to Spectrem Group.

A new study reveals that among investors in the $5 million - $25 million wealth segment not including primary residence, just 73 per cent are satisfied overall with their advisor, down from 80 per cent in 2011 and 81 per cent in 2010 – indicating a downward trend.

The results may come as a surprise to an industry that has been increasingly vocal about the importance of client centricity. Particularly, the research indicates, advisors are failing to meet their clients’ expectations when it comes to investing. Over a quarter of investors across wealth segments - from affluent to high and ultra high net worth – believe they do a better job than their advisor when it comes to investing.

For the high net worth and affluent wealth segments the trend is one of rising satisfaction levels, although from lower levels. According to Spectrem, 72 per cent of millionaire investors (with $1 million - $5 million NIPR) are satisfied with their advisor, up from 70 per cent in 2011 and 2010. Meanwhile, 69 per cent of affluent investors say they are satisfied, up from 66 per cent in 2011 and 61 per cent in 2009.

Loyalty

How satisfied investors are also affects the likelihood they will follow their advisor to another firm. Around half (52 per cent) of UHNW investors said they would do so, compared to 60 per cent in 2011; 55 per cent of millionaires would follow an advisor, compared to 61 per cent last year.

One area where advisors appear to be missing the mark is in the quality of the products and services they are delivering to clients. While a lot has been made about the time pressure advisors are under and the importance of returning clients’ calls and emails promptly– for example a 2011 Spectrem study revealed that unreturned calls were a key reason clients left advisors – the latest research shows that clients are now more concerned about the quality of advisor contact.

Around half of UHNW clients rated face-to-face meetings with their advisor as excellent, as did 54 per cent of millionaires. Only 44 per cent of UHNW and 45 per cent of millionaire investors rated their financial plan as excellent. Even more dishearteningly, just 24 per cent of ultra-wealthy investors and 28 per cent of millionaires said newsletters from their advisors were excellent.

“Wealthy investors are relying less on advisors despite the fact that the majority are retired or approaching retirement," said George Walper, president of Spectrem Group. "To reverse this trend and develop loyalty, advisors need to demonstrate sophisticated, in-depth knowledge about taxes, financial planning and related issues while working more collaboratively with investors who may well have identified investing opportunities on their own."

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