Whatever “wealth management services’’ might mean to a wealthy investor, most of them believe they know what they are but less than half of them actually receive those services.
Spectrem’s study Asset Allocation, Portfolios and Primary Providers, asks affluent investors from a range of net worth levels whether they understand the term “wealth management”. The report also asks investors what “wealth management’’ means in terms of specific services, and asked them whether they receive wealth management services or are considering adding them to their financial services package. Because the understanding and definition of wealth management varies, so do the answers given in the Spectrem study.
For example, among Ultra High Net Worth investors with a net worth between $5 million and $25 million, 93 percent say they know what “wealth management” means, but only 43 percent receive wealth management services. Asked what financial services should be included in wealth management, only 87 percent said “investment planning’’ and only 86 percent said “comprehensive financial planning”.
Eighty-five percent of UHNW investors say “wealth management’’ should include investment management and 84 percent said it should include tax information and advice. Interestingly, only 78 percent believe “wealth management” should include easy contact with a wealth manager to assist with administrative tasks related to investments.
In comparison with UHNW investors, only 84 percent of Millionaire investors (with a net worth between $1 million and $5 million), state they are familiar with what “wealth management’’ means, and only 30 percent currently receive wealth management services. Among Mass Affluent investors (with a net worth between $100,000 and $1 million), 69 percent say they are familiar with the meaning of “wealth management’’ and only 14 percent currently receive such services.
There is a strong belief among all wealth segments that wealth management is a service worthwhile only to those who have a very high net worth. Among the Mass Affluent investors, 46 percent believe wealth management is for people richer than they are, and 28 percent of Millionaires feel the same way. Even among the UHNW investors, 15 percent believe they do not have the net worth to make wealth management services a worthwhile investment.
The other perception is that receiving wealth management services is a costly proposition. Among Mass Affluent investors, 34 percent say the term “wealth management’’ makes them feel they are paying too much for services, and surprisingly, that percentage rises as net worth rises. Thirty-six percent of Millionaire investors think wealth management services are too expensive, and 39 percent of UHNW investors think they would pay too much for wealth management services.
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