A just-released report from the Spectrem Group, a Chicago-based consulting firm specializing in the affluent market, says only 59 percent of high net-worth clients are pleased with their advisors’ performance. That’s down from a 79 percent satisfaction rate just two years ago. Another scary number: Only 60 percent of these $1 million-plus clients think they money they’re paying their advisors is worth it.
"The people we talked to believe they have more complex needs than their advisors are capable of handling," says Spectrem’s Tanya McDonald, who wrote the survey. "This is by far the largest decrease in satisfaction since we started doing [the survey]."
The survey also confirms that many wealthy investors are moving away from stocks and into alternative holdings, like hedge funds, real estate and private equity.
McDonald says advisors tended to do well in qualitative judgments, like communications skills and attentiveness to detail. But bottom-line concerns sent the percentage plummeting. Most respondents said "performance" was the reason they were dissatisfied with their advisors.
Even though this is a bear market, and seemingly everyone’s "performance" is suffering, McDonald says the low scores aren’t just a measure of overall investor malaise. "A good advisor that is proactive can easily overcome negative performance," McDonald says. Several independent advisors back up the study’s claims. "The bear market has been a godsend for my business," one independent advisor says. "There are a lot of high-net worth clients shopping around."
Another independent broker says that it’s not just portfolio performance that’s bringing down advisor approval ratings. "A lot of high net-worth clients are looking for a higher level of service than they’ve had in the past," he says. "People are seeing that they’re doing worse than the market, and I’ve had clients who has switched who say they’re happy not to have to pester their advisor just to find out how they’re doing." "A lot of the wirehouse guys are hiding under their desks. The uglier it gets, the more people turn in my direction," he adds.