The array of financial providers in the U.S. is huge, and the competition appears to be wide open.
There are hundreds of financial provider companies that operate successfully nationwide. Although some companies are larger than others in terms of assets handled and customers served, the market of customers is wide spread among dozens of top firms.
Watch any programming on CNBC or Fox Business, where financial providers one after another try to attract clientele by pitching their financial skills. Likewise on networks like CNN, where an endless parade of providers try to equate working with them to having the life you want in the future.
Our third-quarter report Advisor Relationships and Changing Advice Requirementsindicates that with the research on which providers affluent investors work with. While there are a few that manage affairs with 5 percent or more of the affluent investor market, there are dozens that are selected as the top provider for only a small percentage of investors.
“Name recognition obviously plays a role in the selection of a financial provider, but it is equally obvious that name recognition does not sell the service alone,’’ said Spectrem president George H. Walper Jr.
Our report segments investors into three categories of wealth: Mass Affluent (with a net worth between $100,000 and $1 million, not including primary residence), Millionaire (with a net worth between $1 million and $5 million) and Ultra High Net Worth (with a net worth between $5 million and $25 million).
Those investors are asked to name their primary provider and among all three segments Fidelity came out on top for 2015, with 16 percent of Mass Affluent and 15 percent of both Millionaire and UHNW investors.
Interestingly, Charles Schwab ranks second among Millionaires and UHNW investors, with 9 and 14 percent each, while Vanguard is second among Mass Affluent investors with 8 percent.
The research indicates that UHNW investors are more centralized in terms of the providers they use. Fidelity, Charles Schwab and Vanguard capture 40 percent of the UHNW investors, while the top three providers in the other two segments have between 30-33 percent of the investors.
It is also telling that some of the percentages change over time, especially among UHNW investors. Only two years ago, Charles Schwab had 18 percent of the UHNW investors and Fidelity only had 9 percent. The 2015 numbers show Fidelity with 15 percent and Schwab with 14 percent.
However, the most telling information comes when we list 14 financial providers by the percent of investors they have in fold. Looking at the Millionaire investors, 14 different providers are working with at least 2 percent of investors and the 14 total 69 percent of the market. Thirty-one percent chose “other’’, and those other providers have less than 2 percent each of the market.
Again, among UNNW investors, the list is shorter. Ten providers have at least 2 percent of the market and together have captured 72 percent of all UHNW investors.