Articles for Advisors

Does Increased IRS Agents = Increased Trust Accounts?

The Inflation Reduction Act infused $80 billion dollars into the Internal Revenue Service, likely resulting in a significant increase in regulatory oversight. This increase in tax scrutiny should cause investors to consider their estate distribution plan to ensure minimum tax liability. Has the trust industry seen a change in the number of accounts or assets in the past few years as a result of the increase in oversight?

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How Will The Affluent Vote?

As the U.S. mid-term elections approach, advisors should be aware of the attitudes of their clients and prospects during this volatile time economically and for the markets.  Many of the issues facing affluent investors are reflected in voters of all types in the U.S.

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Convincing Clients to Consolidate Assets - "Just Ask"

One of the most effective ways to increase assets under management and to deepen relationships with customers is to ask clients to consolidate their assets with your firm.  While there are some investors that will never consolidate their assets with just one firm, there are some surprising opportunities available for those advisors who will “Just Ask” their clients to do so.

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Advisor Warning: Increased Turnover Likely

Let’s be honest, advisors generally don’t worry too much about losing existing clients.  Advisor turnover rates, based on Spectrem’s historical data, generally run between 6-8 percent. That trend was broken shortly after the Great Recession with advisor turnover rates increasing to 10-12 percent for 2010 to 2012. Investors didn’t immediately fire their advisors after the 2008 market crash. Most had never experienced such an unprecedented financial event, so they held tight for a year or so before deciding to fire their financial advisor. For most, as the market improved, so did their relationship with their advisor.

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Worries of the Wealthy

“Money doesn’t buy happiness” is a phrase that has been around for a very long time and is often used to illustrate that happiness comes from within, not from a balance in bank accounts, investments, or material possessions. What this phrase doesn’t cover however is if money eliminates worries. Are financial worries eliminated when investors reach a net worth in excess of $5 million? Do these Ultra High Net Worth (UHNW) investors not have personal concerns as a result of having that level of wealth?

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Top 3 Investor Website Demands

Financial advisors and providers spend a significant amount of time and energy developing their websites with the hope that investors will find the information useful and will continue to return to the site. What types of information are investors presently looking for during the current recessionary period?

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How The Wealthy Respond To Inflation

Inflation is impacting everyone, even affluent households.  According to the latest report from the Bureau of Labor Statistics, the annual inflation rate at the end of May 2022 was 8.6%, the highest level since 1981, as measured by the consumer price index.  The common belief is that inflation impacts the middle and lower class more dramatically, but even wealthier households are feeling the pinch….and some of their reactions could even hurt the economy more.

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Which Investors Will Be Impacted By A Cryptocurrency Crash?

Cryptocurrency has been challenged in the past few months with Bitcoin, one of the most popular cryptocurrencies, struggling to stay above $20,000. 

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Investment Performance Expectations in 2022

In a year in which the stock market has already dropped significantly, the ability for a financial advisor to create a significant investment return in 2022 will be challenging.  What are the expectations of investors?  If the market is somewhat bearish, do investors still expect their advisors to have a positive investment return?

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Assessing Risk Tolerance in Times of Market Volatility

While there is still a debate as to whether or not 2022 is a recessionary year, the stock markets have been excessively volatile and mostly bearish.  How does that impact investors and what do financial advisors need to do to make their clients feel confident they are looking out for their best interests?

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Online Tools and Your Website: Worth the Investment?

Advisors must continually invest in their websites to ensure that they contain timely and interesting information for their existing and prospective clients.  One of the types of content included on many websites are digital financial planning tools.  While in most cases these tools are developed by outside software providers, advisors must continually license these tools and make sure they are working effectively.  Are these digital financial planning tools worth the investment that advisory firms must make to keep these planning tools up to date?

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Why Fire Your Advisor?

Changing or firing one’s financial advisor is not common.  In fact, only 14% of investors have changed or dropped having a financial advisor in the last 5 years, according to research conducted by Spectrem Group.  Younger investors are more likely to have made this type of change than older investors, primarily because they have not locked into a relationship and thus their loyalty is not as great.  Overall, research indicates that the longer the relationship has existed, the less likely it will be terminated.

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Is the Pandemic Over?

As mask restrictions begin to disappear, a new strain of Covid-19 is allegedly spreading across the country.  Will the pandemic ever end?  And what do investors think about Covid-19?  Is it still impacting their investment choices?

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Does Gen Z Really Dwell In Their Parent's Basement?

Gen Z refers to those individuals born after 1997 (it’s still unclear when Gen Z ends.). These individuals are still relatively young and most financial advisors don’t really think that they should focus on Gen Z.  But Gen Z is just beginning to join the work force and will be the investors of the future.  Understanding what drives them at a young age will allow financial advisors and providers to develop the products and services that will attract a new generation.

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Are You the "Go To" Advisor?

The wealthiest investors in the U.S., those with more than $25 million of net worth, generally use a multitude of professionals and financial advisors to assist with the management of their assets.  Is it important to be the “go to” advisor or is it OK to be just one of many?  Spectrem recently completed research with investors with more than $25 million of net worth and found that it is important to be the “go to” advisor, but that doesn’t mean it isn’t beneficial to be one of many.

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Who Invests in Crypto?

In recent weeks, cryptocurrencies have been somewhat volatile leading many to question the future of this relatively new, but increasingly popular, investment type.  Are cryptocurrencies merely a trend or an important component of the portfolios of affluent investors?

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Does Ukraine Matter to Investors?

When investors are asked to identify their international and national concerns, 73 percent indicate they are worried about the war in Ukraine and 70 percent are concerned about tensions with Russia, but do these concerns impact their investment decisions?

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Estate Planning for America's Wealthiest Investors

Estate planning is something that many investors avoid at all costs, after all, who wants to talk about death and dying? Skipping this important step in financial planning can have disastrous consequences for investors, including those investors at the highest levels of wealth. A lack of proper estate planning can result in estates potentially losing millions of dollars or struggling with being able to obtain access to millions.

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How Investors Are Dealing With Inlaftion

Inflation is taking a toll on all investors and is currently their greatest concern (79%) both personally and nationally.  Financial advisors should be reaching out to clients to discuss the impact of inflation on their portfolios and to provide some reassurance regarding how to deal with this issue.   Spectrem Group recently conducted research with investors with $100,000 to $25 million of net worth to understand their feelings regarding inflation.

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Wealthy Investors Not Significantly Impacted by Fuel Prices

Despite the more than 50% increase in fuel prices in recent years, most wealthy households have not changed their fuel consumption practices.  According to research recently conducted by Spectrem Group with investors with $100,000 to $25,000,000 of net worth, 84% of investors indicated that they have not changed their consumption of fuel despite rising prices. 

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Investors Don’t Really Understand Social/ESG Investing

Investors seem to be increasing their interest in social and ESG investing, however, their actual understanding of these types of investments is relatively weak.  Social investments started many decades ago and focused on excluding investments that supported “sinful” activities such as tobacco, alcohol and gambling. Since that time social investing has expanded and now focuses more on investing in companies that have strong environmental focuses as well as including social issues. To go even further, impact investing involves specifically investing in businesses that will benefit specific local communities.

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Is Investor Behavior Impacted By A Corporations Politics?

Florida’s Governor Ron DeSantis recently signed legislation that prohibited the teaching of sexual identity in grades K-3 in Florida public schools.  Many in the media and those against the legislation characterized this as the “Don’t Say Gay” bill. The Disney corporation announced that it was against this bill, causing outrage by many conservative parents and others who felt that it was not the role of Disney, known as the leader in children’s entertainment, to become involved in this issue.

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Liquidity, Longevity or Legacy? What Do Investors Choose?

Wealthy investors are often asked to identify their overall strategy for their assets based on the concepts of liquidity, longevity or legacy.  Liquidity is generally focused on the family’s spending needs for the next three years.  Longevity is the allocation of one’s assets to meet their needs throughout their lifetime, and Legacy is the desire to leave assets for one’s heirs and/or causes that they might care about.

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Wealthy Investors Not Really Impacted By Fuel Prices

Despite the more than 50% increase in fuel prices in recent years, most wealthy households have not changed their fuel consumption practices.  According to research recently conducted by Spectrem Group with investors with $100,000 to $500,000 of net worth, 48% of investors indicated that they have not changed their consumption of fuel despite rising prices.  

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The Disney Dispute - Investor Opinions on Corporate Attitudes

Florida’s Governor Ron DeSantis recently signed legislation that prohibited the teaching of sexual identity in grades K-3 in Florida public schools.  Many in the media and those against the legislation characterized this as the “Don’t Say Gay” bill.  The Disney corporation announced that it was against this bill, causing outrage by many conservative parents and others who felt that it was not the role of Disney, known as the leader in children’s entertainment, to become involved in this issue.

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How Much Should You Have In Your Emergency Cash Fund?

When economic and political times are uncertain, the role of a financial advisor is to assist clients in developing tools that will make them feel financially stable.  The most popular tool to establish financial stability is an emergency cash fund.  While advisors may believe these assets might be better off invested, most investors believe that having an emergency cash fund is critical.  In fact, 82% of investors with $100,000 to $25 million of net worth currently have an emergency cash fund, according to research recently conducted by Spectrem Group.

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Who Owns Bonds?

Traditional investment philosophy would lead one to believe that older investors are the most likely to own bonds as part of their investment portfolio.  This makes sense because older investors are generally more conservative and want to protect their investments.  But recent research conducted by Spectrem Group with investors with $100,000 to $25 million of net worth flips this logic on its head.

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How Do Wealthy Women Choose Advisors?

Whether it be as a widow, as a single woman or even as part of a joint decision with a husband or partner, women are increasingly important in the advisor-client relationship.  It is predicted that women will be more important in financial decisions in the future than men. 

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Number of Wealthy Households Continues to Increase

At the end of 2021 there were more than 12 million Millionaires in the United States.  This compares to only 10.5 Millionaires just two years ago.  This information is based on Spectrem Group’s annual market sizing of wealth households in the U.S.  

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Is "Satisfactory" Good Enough?

Financial advisors and their firms make significant investments into the communication materials they produce for investors.  While hard copy newsletters were the original communication tools, in recent years the modes of communication have expanded substantially.  Hard copy newsletters have been supplemented or replaced by electronic newsletters.  Additionally, advisors now produce blogs, videos and podcasts.  But do investors find all of these communications interesting?  Are the communications worth the effort?

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Who Needs an Advisor?

While more than half of investors currently use an advisor, a significant percentage of investors remain “advisor-less”.  Why do these investors avoid using an advisor and what could change their mind?

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Should Corporations Take A Political Stance?

In the past few weeks, Disney has taken a political stance regarding some legislation recently passed in its home state of Florida.  The legislation, which has been called the “Don’t Say Gay” legislation, has become quite controversial despite the fact that the word “gay” does not appear in the legislation.  The legislation prevents teachers from focusing on sexual issues in Kindergarten through 3rd grade.  Despite the mischaracterization of the legislation, many individuals in the LGBT community and other groups have brought significant pressure on Disney to stand up against the legislation.  The corporation now says that it may pursue litigation against the state due to legislation.  Those who support the legislation are now pushing boycotts against Disney.  

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Does ESG Investing Matter to Investors?

On March 22nd of this year, the SEC released standards for corporations of the required disclosures regarding climate related issues.  The Biden administration is focused on numerous environmentally related issues and presumes that investors are equally concerned about these issues when deciding how to invest their assets.  But do investors really worry about these issues when allocating their portfolios and making investment decisions?

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High Cash Levels Among Wealthiest Investors?

Is the volatility of the past few years causing wealthy investors to keep higher levels of their assets in cash and cash-based investments?  While it might be easy to believe the wealthy investors are keeping higher levels of cash in their portfolios, the reality is that they actually have less cash than just a few years ago.

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