How Wealth Affects the Investor-Advisor Relationship



It makes sense that an investor’s wealth level would affect the relationship he or she has with their financial advisor. The wealthier the investor is, the more contact they are likely to have with their advisor.

But, wealth also affects other aspects of the investor-advisor relationship, including they type of advisor they use and whether they refer their advisor to others.

Spectrem’s annual study on the investor-advisor relationship details the differences that occur between an investor with a net worth under $1 million and those with a net worth above $5 million. Advisor Relationships and Changing Advice Requirements complies a comprehensive amount of research information about how investors use their advisor and also tells why some investors do not use advisors at all.

“Spectrem segments investors by age, wealth, occupation and advisor-dependency, and the wealth breaks are among the most revealing because they point out how investors use their advisor based on their wealth level,’’ said Spectrem president George H. Walper Jr. “Advisors can not only understand their wealthier investors better with our research, they can understand why investors in the lower wealth levels might not be using an advisor and what they can do to change that strategy.”

It’s always best to start at the beginning. Eighty-one percent of Ultra High Net Worth investors with a net worth between $5 million and $25 million use a financial advisor. That percentage drops to 75 among Millionaires with a net worth between $1 million and $5 million, and down to 69 percent among Mass Affluent investors with a net worth under $1 million. All net worth numbers do not include the value of the primary residence of the investor.

Why would a person with a significant net worth not want to use a financial advisor? The answers lie in the report, which says that a majority (62 percent) of UHNW who do not use an advisor believe they can do a better job of investing than a professional. The same is true of 51 percent of Millionaire’s who do not use an advisor and 32 percent of Mass Affluent investors in that camp.

Perhaps appropriately, the Mass Affluent investors who do not use an advisor are more likely to believe they do not have the assets which require an advisor’s assistance (15 percent) or they can’t afford the fees or commissions involved (14 percent).

Now let’s look at those investors who do use an advisor. The Spectrem report examines the extent to which an investors use an advisor, breaking them into four categories: Self-Directed, Event-Driven, Advisor-Assisted and Advisor-Dependent. Perhaps because of cost, more Mass Affluent investors consider themselves to be Self-Directed or Event-Driven, with limited or only occasional contact with a financial advisor.

Seventy percent of Mass Affluent investors severely limit their advisor contact, compared to 64 percent of Millionaires and only 56 percent of UHNW investors. These percentage represent investors who do make all of their investment decisions themselves or turn to their advisor only when life requires professional assistance, like when considering retirement or major financial events such as marriage, divorce or a death in the family.

Considering how much assistance they get from advisors, it makes sense that wealthier investors would be more likely to recommend their advisor to others. What is odd is that the percentage of investors who make those recommendations is low overall.

Only 52 percent of Millionaire’s and UHNW investors recommend their advisor to others. That means almost half of very wealth investors who use financial advisors and probably benefit from their advice are unwilling to recommend their advisor to others.

What’s that all about?

Top Takeaways for Advisors

The value of the advisor relationship study comes from knowing the status of investors changes over time. They become older and often wealthier, and as a result, their attitudes towards advisors can change as well. The study shows how an investor’s’ attitude can change over time.


There is significant advantage to understanding why some investors do not use advisors, because those are attitudes advisors can change with informative marketing materials. It might be difficult to change the mind of an investor who believes he is better at investing than a professional, but the cost issue is one that advisor can address head-on. 


©2017 Spectrem Group