Captive brokers may be holding their own with middle-market clientele, but more and more high-net-worth and ultra high-net-worth clients are turning toward independent financial advisers, according to two new surveys.
In the Securities Industry Associations annual investor survey, general investor satisfaction with their brokers was 88%. About 46% said they were very satisfied with their adviser. The survey conducted by Harris Interactive and covering 1,500 consumers with at least $50,000 in household income and $100,000 in investable assets defines advisers as captive employees who offers financial planning and advice and conduct transactions for their clients.
Seventy-three percent defined strong performance track record (up from 60% last year) as an important service their broker provided, while others said monitoring accounts and suggesting changes were important (64% vs. 54%). Still others said keeping clients informed of new investment opportunities (64% vs. 53%) and teaching clients how to make better investment decisions (59% vs. 49%) were the most valuable services offered.
Yet it may be only a matter of time for even these percentages (or at least the base number of brokerage clients) to fall, as more and more independent planners are targeting the mass affluent market. (See Garrett Planning Network Breaks Ground with Employee Workshops)
On the other hand, only 30% of those surveyed in the latest Spectrem Group Relationships with Advisors report on wealthy individuals used a broker, down from 41% in 2001. In addition, only 27% gave their brokers excellent ratings. (The 327 surveyed participants had more than $5 million in investable assets.)
"There was a significant decline there. We saw a big jump in the use of investment advisers, investment managers and a growing interest in financial planners," said Tanya McDonald, director at the Chicago consulting firm. "Investment advisers are used more heavily by the $5-$10 million segment. Financial planners are used most heavily by the $10-$25 million household."
About half of those who use independent advisers wanted what they perceived as more objective advice. Other reasons include: personalized solutions (25%), greater expertise (17%), and access to products and services from multiple providers (6%), according to the report.