Wealthy Clients Need Quick Turnaround

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Here are a few facts that financial advisors might want to act on: A recent study from Spectrem Group found that millionaires are losing their taste for investing. They have also been replacing financial advisors at a higher than usual rate.

Only 47% of the respondents with a net worth of $1 million to $5 million said they like to be involved in managing their investments on a daily basis. It is a steep drop-off from the 65% who said the same in 2010, and the 69% who agreed with this sentiment in 2009. The results were similar for ultra high-net-worth households, those with $5 million to $25 million in investable assets. In that group, 50% want an active investing role, down from 63% in 2010 and 67% in 2009, according to Chicago-based Spectrem Group.

The research firm released the “Ultra High Net Worth Investor 2010” and “Millionaire Investor 2010” on May 24, which delivered a range of findings about how the wealthy view the economy and investing. Spectrem Group polled about 2,133 investors online for the two studies.

When the ultra-wealthy choose a new provider or institution, a full 90% of the respondents said they wanted a company with a reputation for financial stability. Also, 81% want a well-known financial institution, 65% would look at a large national company, 63% want a company with a strong brand, and 36% said they would consider an independent local operator.

Advisors shouldn’t overlook these factors. In a separate finding, 10% of ultra-wealthy respondents changed advisors, compared with the 6% who did so in 2009. Also, 15% changed their primary financial institution. Those are higher numbers than in previous years, according to Spectrem.

Financial advisors don’t get into this business half-heartedly, as anyone can tell by looking at the long hours they put in serving clients’ interests. So how can advisors get their particularly well-off clients excited about investing again, and strengthen the advisory relationship? Spectrem offers a few hints.

Develop terrific follow-up skills, the findings suggest. A massive majority of respondents, 80%, expect a return call within 12 hours, and a very small number, 17% feel that returning a call the next day is good enough. Forget about two days: only 3% of respondents feel that is an acceptable turnaround time.

The wealthy give more leeway when it comes to email correspondences. Half of the respondents in the ultra high-net-worth survey said they expect a return call within five hours, and 28% feel that the next day is good enough. Similar to the results for phone calls, forget about the two-day window. Only 5% of ultra-wealthy respondents feel that is the way to go.

Here is a big part of why clients want advisors to get back to them so quickly: they get a lot of investing information and insights from the professionals. While advisors might run into a lot of ultra-wealthy investors who are as sophisticated about investing as they are, they still want to hear what the professionals think. Spectrem found that 75% respondents from this elite wealthy group get their information about investing from the primary financial advisor. That is huge, considering that just over half, 58%, of millionaires use the primary financial advisor as their news and information source for investing, and just 45% of the mass affluent do so.

As for other sources of information, 59% of ultra-wealthy investors rely on the daily financial press, 48% look to cable television programs, and 39% peruse Web sites other than that of their financial advisor.

These are important insights, especially in today’s investing climate. Spectrem concluded that ultra high-net-worth investors do not believe the recession is over, and are hunkering down for a long recovery. Even though they are no more optimistic than they were in 2009, investors in 2010 had acknowledged that cash was no longer the only investment option. As their tolerance for risk moderates, and they pick up the phone or tap out an email with questions, it will help to get someone on the line.


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