Spectrem recently explored the factors that drive wealthy investors’ decision to change their advisors, and it emerged that feeling somewhat ignored is the number one reason for this.

Advisors who fail to engage proactively with clients, lack creativity in their advice and ideas, and deliver underwhelming investment performance are more likely to lose business from investors than those who excel in these areas, according to a study of over 3,000 wealthy individuals.

Spectrem Group polled 3,070 investors with a net worth of between $100,000 and $250 million for its latest report, Why Investors Switch Advisors, and of these 1,015 have changed their advisor in the past.

When asked why they did so, 24 per cent (the top reason) said their advisor “was not proactive in contacting me.” In second and third place was “my advisor did not provide me with good ideas and advice” (23 per cent) and “was under-performing compared to the overall stock market” (22 per cent). Another high-ranking advisor annoyance was high fees and expenses (16 per cent), according to the report.

At the bottom of the pile of advisor firing catalysts were: “my advisor merged with another firm I did not like” (3 per cent), “my advisor did not respond to email messages in a timely manner” (4 per cent) and “I liked my advisor but did not like the firm he/she was with” (6 per cent).

The findings reinforce the importance of personal experiences in advisor-client relationships, particularly in the high-end wealth sector. They also suggest that the brand under which an advisor operates has a much smaller impact on an investor's decision to change advisors. Dissecting the data by levels of affluence, it emerged that wealthier investors switch advisors primarily due to an advisor's lack of creativity in their ideas and investment performance, while those who are less wealthy are more likely to do so because of insufficient contact.

Tom Wynn, a director at Spectrem, clarified the meaning of “proactive contact” in this context.

“The concept of an advisor being proactive in contacting their client means the advisor contacts their client without the client first soliciting such contact,” he said, noting that this often entails contacting clients on special occasions such as around birthdays or graduations.

But of primary importance is that advisors initiate contact during times of financial stress, such as during a market downturn or a natural disaster, Wynn told Family Wealth Report. “Our research has shown that clients want contact with their advisors during these times, simply to have reassurance that everything is going to be okay and to know that their advisor is thinking of them and is interested in their welfare and their current anxiety.”

Among the key findings of the report overall, Spectrem said, is that advisors need to continually remind investors of their expertise by showing that they are following key trends and issues, and then sharing that information with their clients. The firm also recommends that advisors push clients that do not believe they need specific types of planning to engage in the process.

Millennials less patient

Meanwhile, in line with previous research, the data also suggests that Millennials are less patient than their older counterparts when it comes to putting up with what they regard as advisor inadequacies.

While 11 per cent of the Millennials surveyed (those under the age of 34) have changed their advisor in the past year, only 5 per cent of those aged 69 or over have done so, for example. (The fact that more Millennials than those aged 69 and older have never switched advisors – at 68 per cent and 38 per cent respectively – could be attributed to their (likely) shorter experience working with a financial advisor.) Younger respondents were also more likely to switch advisors due to frustration over slow responses to their emails.

These findings resonate with research from the Luxury Institute released this week that wealth management firms today face bigger challenges when it comes to engaging younger clients with the same kind of success that they currently enjoy with older investors.

Satisfaction peaks at 8.64 on a 0-10 scale with clients aged 65 and older, but drops steadily with decreasing age to its lowest level of 7.48 among clients under the age of 45, according to a recent survey by the firm.

“Similar generation gaps are also evident in younger clients' sharply lower levels of loyalty and decreased willingness to recommend an advisor,” The Luxury Institute said. “Younger clients tend to want transparency in their financial relationships, and to base their choice of advisor on multiple sources of information, including the reviews of other clients.”

Likewise, George Walper, president of Spectrem, previously noted that younger ultra-wealthy investors are less likely to stick with their advisor in the long term if they aren't satisfied with how they are being served, saying: “Loyalty is nowhere near what it is among older people.”