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How the Future Wealthy Choose Advisors

Times are changing. As technology improves and a newer crop of young, affluent investors prepare to locate financial guidance, advisors should ask themselves if they are ready for this next generation. A recent study of the ‘Futurewealthy’ found that reputation and cost rank one and two as the most important factors.

The survey of 3,025 individuals with an average worth of $2.9 million, was conducted by Scorpio Partnerships and sponsored by SEI Investments and NPG Wealth Management.

Values and value will set a financial advisory firm apart as reputation was a leading factor in 74% of respondents’ decisions and cost was most important for 64%.

The Futurewealthy also seek out new advisor relationships in many ways; 22% ask for guidance from friends and family while 15% conducted their own research.

It’s often a life event that prompts a search for a first financial advisor such as a promotion or job change, setting up a trust, relocation, and the desire to diversify assets. Amongst the $4 million and up crowd, selling a business was often a top reason as well. For those on the prowl for a replacement advisor, respondents indicated it’s typically a financial provider relationship failure that jumpstarted the search.

The Futurewealthy expect a lot from their advisors and typically will diversify their assets amongst multiple professionals. Those in the Americas with over $500k in assets typically have more than 2 advisors while those with over $4 million have over 4 financial advisors. While most of the futurewealthy entrust a primary advisor with over 50% of their assets, only 31% believe their main advisor has a solid understanding of their whole financial picture.

“This study shows that the Futurewealthy are constantly searching for a more valued relationship and are open to the idea of switching primary advisors in order to attain it,” said Kevin Crowe, Head of Solutions, SEI Advisor Network. “That creates a strong opportunity for advisors to foster a personal connection with these wealthy individuals by getting to know them and their entire financial picture. Advisors who understand what it takes to capture the attention of the Futurewealthy are the ones who will successfully attract and engage long-lasting relationships.”

Advisors take note, you and your firm’s reputation are most important, while costs are right up there too. Your best clients are probably working with at least one other advisor, if not more.

The good news; social media is not that important! The survey indicated that your social media activity is the least important factor for the Futurewealthy when choosing a new financial advisor.