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Younger UHNW Investors Are Less Loyal, Have Higher Expectations Of Advisors - Research

Eliane Chavagnon, Editor - Family Wealth Report, December 8, 2014

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Younger ultra high net worth investors are less likely to stick with their advisor in the long term if they aren't satisfied with how they are being served, warns George Walper, president of Spectrem.

Younger ultra high net worth investors are less likely to stick with their advisor in the long term if they aren't satisfied with how they are being served, warns George Walper, president of Spectrem.

“If they [younger investors] have been at a firm for a few years and don't think their advisor is a good fit, they'll just change,” Walper said, speaking about the research firm's Advisor Relationships and Changing Advice Requirements report – the UHNW edition. “Loyalty is nowhere near what it is among older people,” he told Family Wealth Report.

Spectrem said its research highlights the importance of forming relationships with UHNW investors while they are younger, and growing the relationship through providing interesting information and value-added recommendations designed specifically for them. The insights also resonate with findings from a report by Accenture last year, which suggested that Millennial investors are more conservative and less trusting of financial advisors than Baby Boomer and “Gen X” (aged 33-47) investors.

With fewer investors today likely to follow their advisor if they switch firms than was the case previously, Spectrem believes that financial advisors must reassess what their “value-add” proposition is for younger wealthy households. (With that said, it noted that there may be a higher tendency among the younger cohort to stay with the firm they are with to avoid the “hassle factor.”) Specifically, the firm anticipates that deeper content knowledge on more specialized products and services will become increasingly important. 

Reinforcing this, the younger UHNW investors surveyed by the firm were less satisfied with their financial plan: those under the age of 49 logged an overall satisfaction level of 73 per cent, compared to 75 and 89 per cent among those aged 50-54 and 55-64, respectively, and 94 per cent among those over the age of 65. Somewhat unsurprisingly, then, they were also less upbeat when ranking specific financial products – as low as 67 per cent among those under the age of 49 compared to 91 per cent among those aged 65 and over. One reason for this could be linked to how young investors today are often very entrepreneurial-minded, with a stronger appetite for more “dynamic” products.

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