Financial providers are numerous, creating a competitive environment in which they must serve the needs of current clients while seeking new clients with advertising that will prompt an investor to sign up.
The proliferation of internet advertising has only made the competition more active. With investors using the internet to research their own investment decisions, pop-up ads for financial service advisors appear on virtually every website that might provide such information.
How new investors determine which company to work with is a matter of advertising researchers, who determine what message works best for investors who are not currently aligned with a provider. But there is Spectrem research that shows which providers are most admired in different categories of service by affluent investors.
Spectrem’s quarterly wealth segmentation series study Asset Allocation, Portfolios and Primary Providers asked investors to rate the leading financial providers in a variety of categories to determine which have the highest approval rating of those investors.
“There are numerous services financial providers offer which differentiate the companies from each other,’’ said Spectrem president George H. Walper Jr. “Companies at the lower end of our list can look at the companies at the top of the list and determine what makes them so successful in these categories. They can then emulate those characteristics or find a new way to create similar levels of appreciation from investors.”
Some of the research points created in the study are obvious ones. Fidelity, Vanguard and Charles Schwab are generally accepted to be the most popular providers, and are the ones investors turn to if they are looking to start a new advisory relationship or increase their current investments with a new advisor.
Among Ultra High Net Worth investors with a net worth between $5 million and $25 million, Capital Group/American and T.RowePrice are also highly regarded in a number of categories.
But where disparity lies in the perception of primary providers is when investors are segmented by age. While those big three still get much of the notice, Northern Trust is highly appreciated by Millennial Millionaires, while the oldest segment of Millionaires are looking at Capital Group/American Funds for quality products and services.
Mass Affluent investors, with a net worthy under $1 million, are also likely to rate providers slightly differently than those more wealthy investors. For example, asked to select the provider which has expertise in managing money, 82 percent of Mass Affluent investors selected Charles Schwab, which only got a nod from 73 percent of UHNW investors for the same skill set. Similarly, Edward Jones was selected by 79 percent of Mass Affluent investors and only 62 percent of UHNW investors.
Switching to those firms more preferred by UHNW investors, 64 percent say U.S. Trust has talented advisors and staff, a notably higher percentage than less wealthy investors. Seventy-one percent of UHNW investors selected BNY/Mellon in the same category, 11 percent more than Millionaires making the same selection.
The survey also does a good job of indicating which firms are affected by news of regulatory issues, as Wells Fargo’s troubles with the SEC are reflected in low preference numbers among all investors.
Top Takeaways for Advisors
The value of the Spectrem research is in determining which companies are operating in a way that investors appreciate. With that information, advisors can see if their own firm is operating in the same way, or if some of their decisions are going against the grain in a way that hurts their reputation among investors.
There is more than one way to operate as a financial provider, and these rankings do not say companies not in the top five are operating improperly. However, any firm that gets a top rating in the Spectrem research is one that investors are likely to promote and recommend with their friends, family members and business associates.
©2018 Spectrem Group