Existing Clients Want More Advice

The good news for reps is that the world doesn’t hate you. The bad news is that acquiring clients--particularly affluent ones--is getting a lot more tough. A recent Smith Barney survey of nearly 1,200 affluent investors shows only 4 percent are chagrined enough after this three-year bear market that they never want to invest in stocks again. More hopefully, a majority of the wealthy investors say

The good news for reps is that the world doesn’t hate you. The bad news is that acquiring clients--particularly affluent ones--is getting a lot more tough.

A recent Smith Barney survey of nearly 1,200 affluent investors shows only 4 percent are chagrined enough after this three-year bear market that they never want to invest in stocks again. More hopefully, a majority of the wealthy investors say they are increasingly likely in the next couple of years to move money from a bank to a brokerage firm.

But here’s the bugaboo: Those who don’t have a financial advisor don’t necessarily want one. Meanwhile, those who already have advisors are clamoring for more advice. The survey--whose respondents had an average age of 51, each with more than $100,000 in investable assets--says 62 percent of those surveyed are willing to consolidate assets with their current brokerage firm.

About 80 percent of the respondents have brokerage accounts. But only 50 percent have full-blown advisors, and of those, 71 percent say they are unlikely to ever get an advisor. Further, nearly half of those dissenters cite a lack of trust as a reason to stay away from advisors.

Those who already have a broker seem to like them: 29 percent are looking for more advice, compared with 19 percent of those who have no broker.

"It is the investors who already have advisors who need even more financial advice, implying advisors potentially have a bigger opportunity to work with existing clients than with new clients," wrote Smith Barney’s brokerage analyst Ruchi Madan.

The survey also suggests brokers have some work to do in managing client expectations regarding the returns investments generate. The survey respondents who employ brokers expect equity returns of 17.6 percent, compared with an expectation of 13.8 percent from those without brokers. Both numbers are above the historical norm. (Expected returns for bonds were 11 percent and 8 percent, respectively.)

Further, advisors might have some trouble converting clients to fee-based arrangements. About one-third of customers currently have a fee-based account, but fewer than 11 percent of the non-fee customers say they are open to switching to a fee-based structure.

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