The fear or intimidation surrounding the prospect of a change, along with uncertainty about whether better options exist, are key factors fueling “investor inertia,” concludes the research by Dynasty Connect shared by the financial advisory network.
The annual survey of high-net-worth investor sentiment was conducted with 1,000 investors who currently work with financial advisors, each with a minimum of $500,000 in assets under management.
Of those interviewed between July 5 and July 15, 2024, 29% began working with their financial advisors within the past four years, and 27% within the past nine.
However, just over half (52%) of respondents have only ever worked with one advisor, 25% have voluntarily changed advisors once, and only 17% have done so twice.
While the main reasons for changing advisors are no surprise—such as investment performance, the advisor’s retirement, or company relocation—it is noteworthy that 30% of respondents cited “meeting a new advisor who impressed them more” as inspiration to start anew.
Personality, fit, fees and fee structure, and lack of contact with their advisor were other key drivers for change, the study adds.
“The majority of people have worked with one or two financial advisors at most, making it difficult to know when to switch,” said Tim Oden, Chief Growth Officer at Dynasty Financial Partners.
Oden added that if investors “are not receiving the attention or results they expected, they owe it to themselves and their family’s future to seriously consider other options.”
Overall, the Dynasty Connect survey revealed that younger clients and those with fewer investable assets are more likely to change advisors.
Relationships Need Care Like Plants
In general, 59% of respondents cite an advisor’s ability to understand their specific needs as key to finding a suitable one, while a relationship breakdown is often due to disappointment in performance or service.
Methods for changing financial advisors reflect generational and technological shifts. Younger investors are more likely to consult databases and online search tools, while older clients often rely on referrals from other investors.
Are You Ready for a Relationship?
While 45% of respondents cite tax planning as a service offered by their financial advisor, only 28% value that feature. The survey illustrates that inconsistencies in valued services mean personalized offerings are key to the long-term success of the client-advisor relationship.
The vast majority of Dynasty Connect Survey respondents value financial planning above all, while the importance of other aspects of their client/advisor relationship depends on their unique needs or circumstances.
Sometimes Being Single Can Be an Option
Overall, surveyed investors expressed confidence that their advisors could support them through key life transitions; however, the rating of “great confidence” decreased in portfolio structuring and market events.
48% of respondents mention potential conflicts of interest due to the advisor’s firm earning money directly from the investment products in which their money is invested. According to the results, younger clients are more likely to distinguish potential conflicts of interest.
Finally, the relationship with children can be more challenging. 41% of respondents’ adult children do not work with their financial advisor, and 34% are likely not to do so in the future.
“The multigenerational opportunity is evident; however, adult children are clearly hesitant to work with the same advisor as their parents,” the research report concludes.
Dynasty Connect is an outsourced front office and growth engine for firms in the Dynasty network, dedicated to supporting their organic and inorganic growth efforts by identifying, qualifying, nurturing, and referring high-quality leads, both end clients and advisors interested in joining firms in the Dynasty network, according to company information.
