Advisers and millionaires are not on the same page, Fidelity Investments said, citing its comparison of the findings of its Fidelity Millionaire Outlook, based on a survey of 1,000 millionaire households, and the Fidelity Broker and Advisor Sentiment Index, the result of a survey of 1,046 financial professionals.
Advisers are far more bullish on the market. They also do not use technology-enabled media such as text messaging and e-mail to reach their millionaire clients, who prefer these forms of communication. And advisers are planning to weight international exposure and annuities in their clients’ portfolios more heavily than these clients would like.
“With 81% of millionaires tapping the insights of at least one financial adviser, it’s clear that there are many core areas in which these financially savvy leaders connect,” said Michael R. Durbin, president of Fidelity Institutional Wealth Services. “Yet, examining the disparities between the groups presents some clear opportunities for brokers and advisers to fine-tune their approaches—specifically by recognizing millionaires’ more conservative economic outlook and investment approach.”
Advisers are far more confident than millionaires about a wide variety of financial indicators: the economy, the stock market, real estate, and consumer and business spending. However, advisers expressed some concern about a rebound in real estate.
Millionaires said they plan to increase their investments over the next year, but they plan to move most of their money into fixed income investments. Nonetheless, 44% of advisers plan to increase their clients’ international/emerging markets exposure, compared to 26% of millionaires wanting this heavier weighting. Sixty percent of advisers plan to ramp up their clients’ annuity holdings, compared to 13% of millionaires wanting this.
Also of note, 85% of millionaires are relying on text messaging, smartphone applications and social media, but only 43% of brokers and advisers are using these technology-enabled outlets. Asked specifically about their professional use of LinkedIn, 34% of millionaires are using LinkedIn, compared to only 16% of brokers and advisers. Sixty-six percent of millionaires said they would like to use technology-enabled media to communicate with their advisers.
The comparison also found that brokers and advisers overemphasize face-to-face meetings, but millionaires prefer e-mail communications, and as a result, 37% of millionaires said they would consider working with an adviser in another location.
“Investing in and adopting communication technologies not only may help brokers and advisers cater to their clients’ preferences, it could also help them save time and money,” said Sanjiv Mirchandani, president of Fidelity’s clearing firm, National Financial. “With the average age of advisers increasing, the younger generation of brokers and advisers have an opportunity to differentiate themselves through their communications approach and attract new clients—specifically clients under 50 who are most actively using technology.”
Asked what they value in their advisers, 60% of millionaires cited superior performance, 47% cited wealth protection and 36% cited access to investments. Comprehensive planning is the top reason millionaires report starting an advisory relationship—with strong interest in the areas of retirement income and tax planning.
While most advisers and brokers focus on clients’ asset levels, age and profession, 56% of millionaires said they would like to partner with a financial professional who shares their investment philosophy.
“This report highlights the importance of brokers and advisers creating robust public profiles that tell their stories, including their personal investing philosophies and how they and others value their services,” Mirchandani said.