Investors have regained their faith in financial institutions, but advisors and other financial professionals still have work to do.
Six years after the financial crisis that shook investor confidence in the markets and the financial industry, a new study from marketing firms Northstar Research Partners and Sullivan reports that eight in 10 affluent investors now "strongly" trust their financial firms.
This marks continued improvement over the last several years. In 2012, the study found that 60% of investors were very satisfied with their financial advisors (up from 51% in 2011) and that 65% were also very satisfied with their financial institutions (up from 46% in 2011).
This year's study surveyed more than 1,800 investors, a majority of which have more than $100,000 in investable assets, excluding real estate and workplace retirement plans. The remaining 15% of respondents have more than $1 million in investable assets.
Nancy Schulman, partner and executive director of strategy at Sullivan, said firms are making consistent improvements as they have found better ways to meet client goals, developing products and services to "support those objectives."
While our study has found revitalization in the relationship between investors and financial institutions, investors are hungry for more help from their advisors beyond just advising on portfolio transactions, Schulman said.
Top of mind for many of the investors involved in the study is healthcare, with 44% citing healthcare expenses or serious illness as a top concern. That was followed by major market declines, with 24% reporting that as a primary concern.
According to Tricia Benn, the managing director at Northstar, the firm's research over the past five years has found "tremendous change" in the sentiments of affluent investors. Key investor concerns uncovered in this latest study show opportunities for deeper engagement between financial institutions and today's affluent investors, especially as it relates to healthcare costs, employer-sponsored retirement plans and the role risk plays in portfolio performance, Benn said.
Though the study indicates that investors want more holistic help, many of them chose to hold assets away from their financial advisors. Nearly 50% of investors reported that they've kept an average of 30% of investment assets under wraps.
And while trust in financial institutions has rebounded, investors are much more wary of information they encounter on social media platforms. While 78% of investors said they trust information from their personal advisors, very few investors (only 8%) view information found via social media as trustworthy.
FEES & PERFORMANCE
Beyond these investor sentiments, the study also looked at fees, portfolio performance and risk appetite. The findings include the following:
- Only 27% of respondents said they knew how much they pay their advisors;
- Of those, 14% said they were unaware that they pay any fees at all.
- Nearly 59% of affluent millennials and 36% of female investors had flat or decreased portfolios.
- Since 2012, twice as many millennial investors considered themselves conservative.
- Compared to men, women are 12% more likely to be conservative investors.
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