Wealthy investors plan to increase their use of financial planners this year, according to a report by Spectrem Group.
More than one-quarter of ultra-high net worth investors plan to increase their use of independent advisors in 2014, compared to only 17 percent in 2012. Seventy-four percent of this group have a net worth between $5 million and $9.9 million.
Mass affluent and millionaire investors also plan to work more closely with independent advisors this year. Mass affluent investors are those with wealth between $100,000 and $999,000. Of the millionaires who were surveyed, 21 percent said they would work with an independent financial planner this year, a 5 percent increase from a year ago.
While successful Americans are looking more toward financial planners in 2014, less than 23 percent of mass affluent investors said they regularly use an advisor, with 45 percent saying they make all of their own investment decisions. Eighty-nine percent of ultra-high net worth investors and 70 percent of millionaires said they regularly work with advisors.
"We're seeing a continual trend toward investors feeling like they want more objectivity," says George Walper, president of Lake Forest, Ill.-based Spectrem Group, referring to fee-only advisors. "That is why we are seeing an increase in use of this type of advisor."
Advisors are attracted to high wealth investors, which is part of the reason investors tend to gravitate toward financial planners instead, Walper said. Mass affluent investors may think advisors are too expensive and they don’t know how to find them.
The report also found that the percentage of ultra-high net worth and millionaire investors who plan to increase usage of full service brokers dropped 7 percent from 2012 to 2013. For ultra-high net worth investors, the drop was 25 percent to 18 percent, while for millionaires it went from 30 percent to 23 percent.
Thirty-seven percent of the ultra-high net worth investors said they plan to make international investments in the next 12 months, compared to 28 percent of millionaires and 17 percent of mass affluent investors. One in five ultra-high net worth investors say they will consider investments in hedge funds or other alternative investments in the next year.
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