This article originally appeared on the SEI Practically Speaking site.
For the last six years, Scorpio Partnership, NPG Wealth Management and SEI have been studying the Futurewealthy. The study covers 3,113 investors from around the world, and defines the Futurewealthy as individuals who are growing their wealth quickly and have an average net worth of $2.7 million. The latest research is focused on the role of the advisor, or relationship manager: what the FutureWealthy want from their advisor, what they expect, and what they don’t want.
The study comes at a good time. In our advisor world, it seems that when you read the trade news, half of the articles are about robo-advisors. The study gives real data about investors’ view of advisors; a view that is often glossed over by industry pundits. The world view is also interesting, as often you see regional expectations of an advisor play out differently driven by regulatory, culture, and technology environments.
The research spans wealth management, which includes banking, wirehouses, and boutique firms focused on high-net-worth clients. In this post, I will identify some of the key findings for advisors. If you want to see the entire study, you can do so here.
The first finding is one of the more obvious; globally, 59% of respondents believe that the main responsibility of an advisor is to increase their financial position.
For a further 42% and 37% , the principal activity is to provide investment education and deliver market updates, respectively. If you roll this up, globally, the most desirable capability of an advisor is to help with wealth creation.
Advisor Responsibilities: Within the context of your entire relationship with your advisor, what do you view as the main responsibility of your advisor? (Regionally Segmented)
But look at the different regions. The Americas’ Futurewealthy focus on financial wealth creation. The Asian Futurewealthy are tactically interested in having the market changes explained. Meanwhile, Europeans have a significantly higher desire for help with the decision process, the effective delivery of financial information, and mentoring (37%, 31%, and 29%, respectively). You can infer from this that Europeans are more interested in the financial planning process, compared to their American contemporaries, who are focused on investment advice.
When you look at the softer characteristics that the Futurewealthy appreciate in an advisor, the following statistics outline the regional preferences:
- Americas: 63% Integrity, 58% Intelligence, 38% Listening, and 38% Attentiveness
- Europe: 71% Professionalism and 30% Discretion
- Asia Pacific: 40% Transparency, 40% Dedication, and 34% Authenticity
So what do Futurewealthy groups of different ages require from their advisors? It is clear that the older segments expect their advisor to improve their financial situation, whereas the younger generations are looking for mentorship and help with the decision process.
Advisor Responsibilities: Within the context of your entire relationship with your advisor, what do you view as the main responsibility of your advisor? (Age Segmented)
The information yields some other interesting interpretations. Firstly, why is it that the Americas are answering similarly to the older segments, whilst the Europeans are more like millennials? Now that is counter-intuitive; you would think that the younger continent would have a more youthful approach!
The older segments have more specific opinions about what they want from their advisor; their answers range from 73% to 5%. Meanwhile, the younger segments want a broader set of services from their advisors; their answers range from 48% to 15%.
Access to guidance: Do you feel that your advisor provides you with guidance and information to make informed investment decisions?
This question illustrates an interesting result emerging from the data. The younger the respondent is, the more they feel that they are not receiving the guidance they want from their advisor. This makes sense, when you think that until recently, most advice has been tailored to the older generations, who are perceived to have most of the world’s wealth.
What can we take from this research?
• Everyone is looking for advisors who can deliver strategic advice
• The different continents look for that strategic advice to be provided in different forms
• The older segments want their advisors to increase their wealth, whilst the younger segments want a broader array of services from their advisor
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