Honesty and trustworthiness are the primary factors wealthy investors consider when selecting a new financial advisor. By and large, these elite investors trust their financial advisors. On a scale of 0 to 100, on which 100 equals “great trust,” Millionaires with a net worth between $100,000 and $1 million (not including primary residence) score 83.06. Ultra High Net Worth investors with a net worth between $5 million and $25 million (NIPR) score 85.06.
How do they define trust as it relates to their working relationship with a financial advisor? Our wealth market study Advisor Relationships and Changing Advice Requirements, finds that for both of these wealth segments, the highest percentage of respondents (85 percent) define trust as their financial advisor looking out for their best interest, while two-thirds define trust as their advisor being proactive in contact them to inform them about important developments that pertain to their investments.
Four-in-ten consider define trust in their financial advisor to be that they are charged fees that reflect the perceived value of the services provided, and that the advisor makes no mistakes in the work they perform. In a related note, 38 percent define trust as it pertains to their financial advisor to be an admission from their advisor when he or she is perceived to be wrong.
Trust in a financial advisor tends to generally increase with age, our study indicates. Millionaire seniors ages 65 and over, along with baby Boomers ages 55-64 are the most likely to define trust as it relates to a financial advisor to be that the advisor is looking out for their best interests and is proactive in calling with important financial information pertaining to their investments.
Gen Xers ages 36-44 are the most likely across all age groups to define trust as an advisor admitting when they are wrong and charging fees that reflect the perceived value of the services provided.
Millennials must have their own definitions of what trust is as it relates to a financial advisor. The highest percentage (just 37 percent) define it as an advisor being proactive about developments that pertain to their investments, an advisor admitting when he or she is wrong, and an advisor making no mistakes in the work they perform.
While wealth is not a significant factor in how Millionaires and UHNW investors define trust as it relates to working with a financial advisor, there are differences across the occupational spectrum. Business owners are the most likely to define trust as mistake-free work (51 percent), while senior corporate executives and managers are most likely to define trust as an advisor looking out for their best interests (roughly 85 percent).