Articles for Advisors

Do Providers of Wealth Management Have Greater Share of Wallet?

Financial providers are constantly working to differentiate themselves from their competition.  Consistent evolution of service offerings has become necessary as the financial landscape has changed dramatically over the past several decades.  Investors having access to information and DIY options regarding every aspect of their lives, including financial management, has made it even more critical for financial firms to understand what types of services they can offer that provide the added value investors are seeking.

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How Will I Get Rich?  Does the Social Class You Were Born Into Still Impact Wealth?

One of the fundamental beliefs of the American Dream is that if you work hard, you can become wealthy.  While that is true for many of the Millionaires and Ultra-wealthy households Spectrem has interviewed over the decades, the number of households that become wealthy due to inheritance has increased substantially in recent decades.  When Spectrem first began in-depth research wealth, only 8-10% of individuals became wealthy due to inheritance.  Younger generations are much more likely to attribute their wealth to inheritance than those in the past.

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Focus On What Investors Want

The financial services business was built upon an investment management foundation.  For decades, individuals with significant assets did not have access to the tools or knowledge regarding how to invest their assets.  But in the past few decades, the abundance of online investment and financial planning tools have become readily accessible to most individuals.  At the same time, the size of the wealth markets has increased substantially due to greater access to investments and overall greater wealth within the country.  These changes have, however, changed the role of a financial advisor.  No longer are investors just seeking investment advice.  They are looking for more complex advice.  However, financial advisors are most comfortable providing investment advice.  This leads to significant gaps in the relationship between investors and their advisors.

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Personal Experience - Planning Decisions of Small Business Owner

Small business owners have unique and complex decisions to make regarding estate planning….and it’s easy for them to ignore these challenges as long as possible because they are busy running their business and because of the complicated decisions that need to be made as part of the process.  While Spectrem Group has done extensive research on investing and the estate planning process, having recently experienced this particular process brings clarity to how the decision-making really works and how financial advisors can assist with the process.

 

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“Wealth Manager?” “Financial Advisor?” “Financial Planner?” What Do Clients Want to Call Their Financial Advisor?

As the wealth management industry continues to evolve, the actual title of the primary advisor for investors has also changed throughout the years.  At the beginning of the century, most investors relied upon a full-service broker, who was generally called “my broker”.  But as online trading began to take over the role of the broker and holistic financial advice grew in importance, the name of what a financial provider was to be called also changed.

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Impact of Biden Administration on Investments

As Congress wrangles regarding the $1.75 trillion infrastructure bill, investors wonder about the ramifications of this bill on the economy and particularly on their investments.  While investors worry about issues from inflation to supply chains, the opinions of investors vary based upon their occupation.

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Inflation Fears of the Wealthy

Inflation, which defined the late 1970s, has once again reared its ugly head and is becoming a concern for Americans of all wealth levels.  CNBC reported on October 29, 2021, that headline inflation, including food and energy, rose at a 4.4% annual rate in September, the fastest since 1991.  Core inflation increased at 3.6% for the 12 months ending in September, also the fastest pace in 30 years.

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What Does ESG Mean to Investors?

ESG is a term that some investors are not very familiar with, yet the concept of investing in such a way that follows one’s moral, political, or social ideologies is desired by many wealthy investors.  Some may choose to specifically avoid certain types of companies or investments that negatively impact the environment or promulgate perceived social injustices.  Other investors may seek to invest in companies or countries that are seeking to solve the environmental or social concerns in various areas.  Many investors call this type of investing socially responsible investing, as ESG is typically a term used in the industry, not by investors.  What level of interest do wealthy investors have regarding this type of investing and how do investors typically choose to invest in this specific strategy?

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Total Market Shrinking, But There is Hope

The total number of personal trust accounts has been on a steady decline for 12 years, according to Spectrem Group’s “Comprehensive Bank Trust Update”, with only 432,902 personal trust accounts in 2020.  However, for the third year in a row bank personal trust assets have increased, ending 2020 at an estimated $1.14 trillion.  This asset level still remains below the high achieved in 2007 of $1.15 trillion.

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The pursuit of financial stability has long been a component of financial success among all investors.  The desire to accumulate wealth and working hard to achieve that wealth is also something that is shared amongst most investors.  Millennials have very different attitudes towards accumulation of wealth, as well as how they feel about the wealth they have accumulated than Gen X investors.

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