© 2019 SourceMedia. All rights reserved.

Wealthiest Investors Seek Independent Planners, Study Shows

America's wealthiest investors plan to increase their use of independent financial planners in 2014, according to a new study issued Wednesday by Spectrem Group.

Twenty-six percent of ultra-high-net-worth  (UHNW) investors are planning to increase usage of independent advisors compared to 17% in 2012, according to Spectrem’s fourth quarter wealth segmentation report. Of the UHNW investors surveyed, 74% have a net worth between $5 million and $9.9 million.

Other investors described as millionaires and mass affluent are also considering working with independent advisors.

Of the millionaires polled, 21% answered that an independent financial planner was the type of advisor they plan to start or increase usage of in 2014, a 5% increase from a year ago. Among mass affluent investors surveyed, who have wealth levels between $100,000 and $999,000, there was a smaller rise. Twenty percent plan on working more with advisors compared to 19% in 2012.

George Walper, president of Lake Forest, Ill.-based Spectrem Group, says the study's findings highlight investors' increasing appetite for unbiased investment advice.

"We're seeing a continual trend toward investors feeling like they want more objectivity," says Walper referring to fee-only advisors. "That is why we are seeing an increase in use of this type of advisor."

Because the survey refers to independent advisors and does not ask investors specifically about fee-only versus dually registered advisors, Walper notes that respondents may have varying interpretations of what consitutes independent advice. 

While successful Americans are looking more toward financial planners in 2014, less than a quarter (23%) of mass affluent investors indicate that they regularly use an advisor with 45% saying they make all of their own investment decisions. However, nearly nine in 10 UHNW investors (89%) and 70% of millionaires acknowledged regularly working with advisors.

"That is a group that has a little bit more knowledge of where to find advisors and advisors also try to find them," says Walper on why investors with $1 million or more in assets tend to go with financial planners in greater numbers. "[Mass affluent investors] may perceive that advisors are too expensive and they don't know how to easily find them."

Other key findings from the Spectrem report include:

  • The percentage of UHNW and millionaire investors who plan to increase usage of full service brokers dropped 7% from 2012 to 2013. For the UHNW it dropped to 18%; for millionaires it fell to 23%.
  • 37% of UHNW investors indicate they will make international investments in the next 12 months compared to 28% of millionaires and 17% of mass affluent investors.
  • One in five UHNW investors say they will consider investments in hedge funds or other alternative investment vehicles during the next 12 months.

Read more:

For reprint and licensing requests for this article, click here.