UHNW Lack Financial, Estate Plans, Survey Says
Ultra-high-net-worth individuals use their financial advisors to help
make investments and diversify their portfolios, but less than half have
asked their advisors for a complete financial plan and less than a third have asked for an estate plan,
according to a recent study.
These are two areas that need the attention of the ultra-high-net-worth individuals, those with $5 million to $25 million in investable assets, and their advisors, according to the Spectrem Group study.
Only 31% of the wealthy use their primary advisor to establish an estate plan, according to the survey. "Clearly, these households will need to do some planning to effectively transfer their assets to their children and grandchildren," Spectrem concluded.
Likewise, only 48% use their advisor to establish a complete financial plan.
"As these investors continue to determine their retirement path, it may become increasingly important to identify a liquidity plan as well as discuss long term care and related health issues and scenarios," Spectrem said.
The majority of ultra-high-net-worth investors use their advisors to diversify their assets (66%), select individual stocks and bonds (66%) and create an investment plan (61%).
The good news for advisors, most of whom give added services to the high-net-worth clients, is that 60% would go with the advisor if he or she left the firm where they are, and slightly more than 70% would recommend the advisor to a friend or family member.
Just over two thirds are comfortable with the fees they pay and most prefer to pay fixed fees rather than fees tied to performance, or fees that are commission based or asset based.
The number one insult an advisor can impose on a client and risk losing him or her is to not return telephone calls or emails, the survey says. But 86% give their advisors high marks for responding to inquiries. At the same time, one area advisors have to work on is improving their blogs and newsletters. Only 11% of investors rated their advisors' blogs as excellent and only 23% rated the newsletters as excellent, according to the survey.
Account statements on their other hand were rated excellent by 71% of respondents and face-to-face meetings rated an excellent from 61% of investors.