A predicable influence that is changing the way the well-off manage their financial lives and choose advisors is the Internet. Obviously it will play a larger role in the future of how the wealthy interact with their advisors, but it will also affect the loyalty that investors feel for their advisors. Millionaire investors desire to know what is happening with their assets instantaneously. Eighty-two percent of individuals over age 61 are spending time on the Internet, and about one-half of moneyed investors are spending more time online regarding financial issues than a year ago. In fact, 60% of affluent investors age 50 and younger are doing more online financially, compared to 30% of those over age 61. Confident about their own ability to make investment decisions, the informed rich will purchase products directly from product providers via the Internet, most likely avoiding their advisor altogether.

Because of the increase in Internet dependence, it is easy to predict a decrease in loyalty to advisors, for several reasons. As greater emphasis is placed on conducting financial services online, about one-half of prosperous investors feel that the personal touch existing between providers and customers is being eroded. This finding is fairly consistent across demographic segments, and increases as investors age.

The second reason is that investors will weigh the expertise and ease of use of their advisor against their own ability to manage their investments online. Advisors must be able to demonstrate their value in these trying times in order to earn customer loyalty. A successful organization, seeking to acquire or keep their affluent clients will concentrate on their core competencies. Working with advisory firms providing objective investment advice and in-depth financial planning services will be important for the wealthy. These are the firms that will rise above the pack and these are the firms that you will want to align yourself with.

Clearly, the need for and relationship with advisors is changing and will continually be affected by the Internet and other technological advances. Slightly more than one-half (51%) of rich investors feel that doing things online with financial services firms has caused a loss of personal touch. This particularly influences women clients. Investors’ expectations of advisors will be and should be higher than in the past, and the inability of advisors to meet greater expectations created by the ease with which the affluent can manage their own funds online and gather financial information, will lead to a decrease in loyalty. Investors will seek out advisors who are specialists, and investors should utilize specialists, or choose a generalist who has access to experts at no additional cost. “One-size-fits-all” advice should be soundly rejected by informed well-to-do investors, who will favor individualized solutions, and applied expertise.

All of these factors will influence the types of providers the wealthy will choose in the future. Investors will lead the way, and the wise advisors and firms will follow, or at least try and catch up. Investors should look for firms that are technologically savvy, and willing to demonstrate their specialization or help clients get the information that they need through partnerships and meet their higher expectations.

Trends:

The Internet will play a larger role in the future of wealthy investors’ financial transactions and information gathering.

A decrease in loyalty to advisors due to the ease of account management and transactions online.

Investors’ expectations of advisors will be higher and the need for advisors to specialize.

Discuss this article on the forums. (0 posts) 

---