It is not unusual for affluent investors to have more than one financial advisor.
According to Spectrem research, 37 percent of Millionaire investors with a net worth between $1 million and $5 million use multiple advisors. More than half of Ultra High Net Worth investors with a net worth between $5 million and $25 million use more than one advisor. Further research shows that some investors use more than one financial advisor because they cannot find an advisor who performs all the financial duties the investor requires.
That response begs the question: Would you prefer to have one financial advisor who can handle all of your financial needs?
Affluent investors aren’t so sure such an entity is valuable, or even exists.
Spectrem surveyed more than 1,100 investors and asked them to place the importance of a “one-stop shopping” advisor firm on a 0-to-100 scale. The average response was about as middle of the road as one could hope for – 46.99.
The fact the average is just below the 50-mark is an indication that a one-stop financial advisor service is not a priority of any investor, although some obviously would be willing to work with such a firm.
There are only slight variations of opinion based on investor segmentation. For instance, investors with a net worth below $100,000 (not including primary residence) had the lowest opinion of the importance of such a service at 40.79.
On the other end of the line, senior corporate executives had the highest opinion of such a possibility at 53.31. Business owners were much lower at 34.59, the lowest segment of all investors in the survey.
Perhaps the response to the question was tempered by the fact that most investors don’t believe any advisor can actually serve as an advisor for every financial or investment purpose. Asked “how realistic is it to find a company that can adequately provide all of your financial needs?” And the response was similar to that of the other question at 47.77.
Again, senior corporate executives had the most optimistic rating on the possibility of a one-stop shop at 51.76.
The appeal of one advisor serving all financial and investment purposes would probably relate to fees and communication. Coordinating all of an investor’s financial matters would provide a clearer picture of an investor’s portfolio strength and weaknesses, and there might be a reduction in fees if one advisor handled all aspects of an investor’s financial matters.
On the other hand, investors often like to use more than one advisor to compare services between two or more advisors. There is also a disparity between how investors perceive advisory firms based on tasks performed and skills offered.
Top Takeaways for Advisors
Is it unrealistic for an investor to believe they can get all of their investment and financial needs serviced by one provider? Will investors trust one advisor to perform all of the duties they expect from a financial services company?
A discussion with an investor can help alleviate concerns related to the scope of your services. If there are areas that require specialty advice, let the investor know where you are going to go to get that advice. If an investor likes the idea of a team of advisors, make that happen. The preferred goal is to not put the investor in a position where he or she feels the need to go outside of your firm to find the advice they need.
©2017 Spectrem Group