Wealthy Investors Turn to Advisors More

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Wealthy Investors Turn to Advisors More

In 2008 the economic and political climate are having an enormous impact on the Ultra High Net Worth investor (those with between $5 and $25 million in net worth, not including their primary residence). For the most part, the economic downturn has led to that wealthy group of investors to seek out more help from advisors than before.

Financial advisors have become increasingly important to the UHNW.Unlike 2002 when investors moved away from advisors and became increasingly self-directed, UHNW investors today are increasing advisor usage. There are multiple reasons for this change.

Nearly half of the UHNW indicate they plan to choose their financial advisors differently than in the past. Just under one-third believe they will use an advisor more in the future than they do now. Investors did not fare well in the last down market when they chose to make decisions on their own, so they are less confident in their own abilities to make the right decisions today. In the last down market the reasons for the economic downturn were self-evident – 9/11 and the plunge of the dot.com industry. The 2008 market is prone to multiple types of influences which the average investor does not necessarily understand or track, including the price and supply of oil, the mortgage crisis as well as the economic challenges of many of the major U.S. strongholds (i.e. GM, Merrill Lynch, etc.)

Younger persons show a much greater interest in growing their wealth while the older segments are more concerned with preserving their wealth.Among those who are wealth accumulators, 11% anticipate reaching their financial goals through one big monetary event such as an inheritance or selling a business. Most plan to increase their wealth with a disciplined savings program which includes a well established plan for reaching goals, with a regular review of those goals.

But because the overall the average age of the UHNW investor is slightly older, making preservation of wealth increasingly important and they have a better grasp of the changes in the economy; at least enough to know they need a little more help. This causes the investor to seek additional collaboration with their financial advisor. Investors, in general, are well-informed and more knowledgeable than in the past. While investors turn to their advisors for most of their financial information, a large percentage also listen to the cable news on a daily basis which is full of economic information. In addition, many of them read multiple books about financial issues each year. The UNHW investors have high expectations of their advisors and expect them to remain knowledgeable regarding issues and topics that investors will be seeking their opinions about.