Rich Clients Don’t Blame Brokers for Losses, But Losing Touch is a Sin: Phoenix Study

The good news: Wealthy people are mostly satisfied with the advice their financial advisors give them. The bad news: Advisors believe their clients are more dissatisfied with them than they really are.

The good news: Wealthy people are mostly satisfied with the advice their financial advisors give them. The bad news: Advisors believe their clients are more dissatisfied with them than they really are. In many cases, that keeps reps from picking up the phone and that leads to the worst news. A quarter of high-net-worth investors say they are looking for a new financial advisor in the next year because their current brokers aren’t paying enough attention to them.

At least that what’s the annual Phoenix Wealth Management Survey of the High Net Worth and Their Advisors found. The research, conducted by the Harris Poll Online, found that 79 percent of clients are satisfied with their advisors. And, even though brokers guessed that 31 percent of clients are truly dissatisfied, the survey found that only 9 percent described themselves as "very" or "extremely" dissatisfied. About 12 percent said they are "somewhat" dissatisfied with their primary advisors.

Even so, 25 percent of the high-net-worth respondents (those with $1 million in assets, not including a primary residence) say they are in the market for a new advisor. The root problem, says Walter Zultowski, head of marketing and market research at Phoenix, is that advisors are ducking their clients—or at least that’s how they are perceived.

"Clients just can’t fathom why their financial advisor doesn’t help them out at this stage," Zultowski says. He says that advisors are hurting themselves by assuming that clients are furious about market losses. They approach a client, says Zultkowski, like a guest who has "just ran over the cat" as he pulls into the driveway.

In fact, Zultowski says, the research indicates that, by and large, clients take responsibility for their investment decisions and feel that they were responsible for making investment choices. "Advisors have ascribed a greater importance to their role than the client has," Zultowski says.

Finally, the study indicates that brokers who can resume the role of advisor will find clients more receptive. Clients say they are now less likely to rely on their own judgment. The number of wealthy clients making most of their own investment decisions has fallen from 53 percent in 2000 to 45 percent. The wealthy that described themselves as "very/fairly" knowledgeable about investing has fallen to 55 percent from 64 percent over the same period. The survey found that 36 percent of the respondents say they are confused about how to invest, and 68 percent say they follow their advisor’s advice most of the time.

"Clients want a direction and they want a plan," Zultowski says.

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