High net worth investors rank honesty and trustworthiness as the top criteria for selecting a financial advisor, according to Millionaire Corner research that finds positive character traits are more highly valued when selecting a financial advisor than an advisor’s track record or fees.
Virtually all high net worth investors (99 percent) surveyed by Millionaire Corner last fall said it was important for an advisor to be “honest and trustworthy,” while 93 percent considered the individual’s investment record when selecting a financial advisor.
Ninety-three percent also valued an advisor who “provides transparency and keeps me informed in what they are doing.” Depth of products and services offered is important to 86 percent of high net worth investors, while 83 percent consider the fees or commissions charged when selecting a financial advisor. (Millionaire Corner research shows that high net worth investors, individuals with $5 million to $25 million to invest, prefer fees to commissions.)
Friends and family members can be highly influential in the process of selecting a financial advisor. More than half of high net worth investors (51 percent) said they initially found their advisor through a personal referral. In contrast, an advertisement or article in financial publication steered 5 percent of high net worth investors to their advisor.
When selecting a financial advisor, a high net worth investor is most likely to seek the services of a full-service broker. Nearly 40 percent currently work with a full-service broker, compared to 21 percent who works with an account and 17 percent who works with an independent financial advisor. (Click here to learn more about the pros and cons or working with a full-service broker vs. a registered investment advisor.)
High net worth investors express a high degree of loyalty to their advisors. Eighty percent say that, overall, they are satisfied with their advisors and 91 percent say they plan to continue to working with their primary advisor over the next 12 months. This is a typical response for high net worth investors, who tend to have long working relationships with financial professionals. Close to 40 percent has have worked with their advisor for three to 10 years. About 22 percent have had the same advisor for 10 to 15 years, and 24 percent for 15 years or more. Sixty percent said they would follow their advisors if they moved to another firm, rather than go through the process of selecting a financial advisor again.
Not all high net worth investors are interested in selecting a financial advisor: Ten percent say, “using an advisor is something I have not considered.” On the other hand, the 70 percent have referred their advisor to someone they know, playing an influential role in helping a friend or family member on selecting a financial advisor.