Dynasty Financial Partners announced the results of a Dynasty Connect survey of 1,000 high-net-worth respondents, all of whom work with a financial advisor. The respondents each had a minimum of $500,000 in investable assets. The survey was conducted in partnership with Absolute Engagement between April 20-May 1, 2023, and has a 3.1% margin of error.
According to the survey, a surprising number of wealth-management clients do not shop around before choosing a financial advisor. Instead, they work with the first financial advisor they speak with.
When asked, ‘With how many advisors did you have a conversation prior to hiring your current advisor?’ 57% of respondents stated that they had ‘only spoken to their advisor.’
“It’s an extraordinary finding that high-net worth families are selecting the first and only advisor they speak with. It’s like buying the very first house you look at,” according to Dynasty Financial Partners CEO, Shirl Penney. “At Dynasty Connect, we provide due diligence and deep understanding of the options wealthy families have when seeking financial advice and introduce those families to independent financial advisors suited to meet their needs.”
Trigger for Seeking Advice
In addition, the survey highlighted that a ‘life event’ was often the trigger for seeking professional advice. These life events include ‘received an inheritance,’ and ‘change in employment situation.’
“These findings about life events triggering the need for professional advice highlight the need for high-net-worth families to conduct appropriate due diligence. Investors need to ensure their chosen advisor has the right experience to handle the often-complex nature of these life events for families of significant wealth,” said Mr. Penney.
“Our goal is to ensure a wealthy individual or family can find a financial advisor who dovetails with their needs, personality, and vision,” he said. “It’s paramount to find a ‘custom fit’ in your advisor so you together may achieve your goals.”
Informal Referrals to a New Advisor
The Dynasty Connect Survey also found that when seeking a new advisor, 46% of respondents were referred by ‘a friend, family member or colleague.’ Respondents under the age of 45 are less likely to rely on referrals and use multiple sources to identify potential advisors. Those younger respondents were about 3-times as likely to find a new advisor using online searches, social media, blogs or other online sources.
“Sadly, data show that relying on your friends and family for referrals may not be the wisest strategy for these wealthy investors, as everyone’s circumstances and needs are unique,” explained Mr. Penney.
The survey results underscore that many high-net-worth individuals are not fully aware of the availability or value of a highly-customized relationship with their advisor, according to Mr. Penney.
“At Dynasty Connect, we want to increase awareness and educate families about the benefits of a strong client-advisor relationship,” he said.
Advisor “Churn”
Highlighting the due diligence gap was subsequent advisor ‘churn’. According to the survey, 61% of respondents under the age of 45 that had changed advisors in the past said they changed because of a mismatch in the relationship, described as ‘looking for a different/specific expertise.’
If high-net-worth investors don’t feel they are in a trust-worthy, high-value relationship with their advisor, they end up switching, according to the survey. Respondents said they switched their advisor for reasons ranging from ‘investment performance’ to ‘I didn’t feel like a valued client’ to ‘I needed different or specific expertise.’
“By performing appropriate due diligence, wealthy families could select an advisor that is a better fit from the beginning, instead of expending a lot of time and energy with the wrong advisor,” added Mr. Penney.
