After navigating their portfolios through some very difficult investment waters in recent years many ultra high net worth investors are now adopting a more laissez-faire approach to their investments, leaving the day-to-day details to their financial advisors.
According to a new survey released this week by Spectrem Group, a Chicago-based strategic consulting firm specializing in the affluent and retirement markets, only 47% of investors with a net worth of between $1 million and $5 million said they prefer to be actively involved in the day-to-day management of their investments.
That's down from 65% last year and 69% in 2009, a sign, according to analysts, that the rich are suffering from an acute case of investor fatigue after years of hand-wringing and strategic maneuvering.
"Millionaires' desire to roll up their sleeves and get involved with their own investments has declined substantially since 2009, following a period of intense vigilance and participation during the financial crisis," Spectrem Group President George Walper, Jr. said in the report. "Wealthy Americans may simply be experiencing investor fatigue, prompting them to pull back and allow their advisors to take the lead in managing their assets."
This behavioral change bodes well for financial advisors looking to bolster their client rosters and augment their assets under management. It also comes at an opportune time considering the market's recent strong performance, the massive transfer of wealth from Baby Boomers to their heirs and the exponential increase in new millionaires -- particularly those living outside the U.S. -- expected during the next decade.
Earlier this month, a report from the Deloitte Center for Financial Services estimated that the total wealth among millionaire households will more than double from $92 trillion to more than $202 trillion by 2020.
This declining interest in micromanaging accounts is just as pronounced among investors with a net worth between $5 million and $25 million, according to the Spectrem survey of 649 households in this elite category. Of this group, now only 50% said they want an active investing role, down from 63% last year and 67% in 2009.
The survey also found that only 45% of those with a net worth of between $1 million and $5 million still feel that day-to-day portfolio management is something they enjoy and don't want to give up, a steep decline from 64% in 2009. Among the ultra high net worth set, that number tumbled to 54% from 63% two years ago.
For what it's worth, a LIMRA survey earlier this month found that almost two-thirds of all pre-retirees are still not working with a financial advisor and of this group, only 46% believe they'll be able to afford a reasonably comfortable retirement.
More to the point, more than three-times as many investors who have yet to hire an advisor admit they feel unprepared for retirement compared to those who have already enlisted the services of a professional investment advisor.