Client Loyalty Has Its Limits, Survey Says
Trust has long been the cornerstone of the advisor-client relationship, but a new study shows it's time for some strategic rebuilding and a closer look at the way advisors work and communicate with their clients.

One issue made clear by some investors is their "restlessness" in regard to where they keep their money, according to the second edition of the Rebuilding Investor Trust study, conducted by Sullivan, a New York communications strategy and design firm, with Northstar Research Partners. The survey sampled 1,290 U.S. investors with investable assets of at least $100,000 (15% had more than $1 million).

The survey showed that 36% are considering moving their assets away from their financial advisors in the next year, despite the trust they place in their advisors-a level which shot up from 61% of survey respondents in 2009 to 74% in 2011. Nearly 25% said they would drop their current advisor for someone they believed could provide a superior customer service or investment options-again, despite 51% reporting they are "very satisfied" with their personal advisor and 43% saying they are "very satisfied" with their firm. Of those considering moving their assets away from an advisor in the next year, 40% work with a bank advisor and 20% with an investment advisor/firm. Of investors surveyed who had no advisor, 25% expect to be working with one within a year.

Not only are investors seemingly capricious in regard to advice givers, they are exhibiting a "new conservatism" as well. According to the study, investors are being more careful with their money and saving for the future. Conservatism is relative, however. In 2009 when the first Sullivan/Northstar study was conducted, 54% of investors considered themselves conservative (up from about 22% before the recession in 2008). This figure settled down to 41% in the current study. In general, investors become more conservative as they grow older-44% of those surveyed aged 25 to 45 have at least half their assets in cash, compared with only 25% for people aged 65 and older who have half or more of their assets in cash-and divorced or widowed persons are more conservative than those that are single or married, the study notes. This conservatism differs between genders, too, with 50% of women investing somewhat or very conservatively, up from only 24% in 2009.

The study also concluded that investors would benefit from use of a "new language" in dealing with their finances and advisors. Survey data showed that "savings" was the number one word garnering positive reaction (among 98% of investors), edging out "growth" at number two. "Fluctuating" was the most negative phrase (76%), followed by "fee-based" (64%). Words and phrases that convey objective credibility and personalization, such as "licensed," "experienced," and "certified," are deemed the most believable.

Led by Sullivan founder and managing partner Barbara Sullivan, the study not only sheds light on investor feelings about trust, loyalty, and communication. It explores what organizations can do to continue to improve their relationships with investors, and capitalize on opportunities with underserved investors (mostly younger) and those nearing retirement (82% of survey respondents cited retirement as their key concern). Go to for further information.

In other news ... 

U.S. Planning Group, an independent financial planning and wealth management firm based in New York, this month will launch two new enterprises: Crystal Wealth Management Inc. ( and Private Client Insurance Designers ( The new businesses will strengthen U.S. Planning's wealth transfer and wealth building capabilities, according to the company. Go to for further information.

Indonesia's central bank on June 3 will lift a one-month ban on most banks there, which prohibited them from seeking new wealthy customers, though several banks are still suspended from recruiting them after failing to comply with central bank findings, according to Reuters. The ban was instituted following investigations of fraud in regard to wealth management services in the past two months at top banks including Citibank Indonesia and Bank Mega, reported Reuters. Anti-fraud and consumer-protection measures have been taken by the country's banking regulator, Bank Indonesia.

Mercer Investment Consulting Inc. (, a New York-based subsidiary of Marsh & McLennan Companies Inc., has signed an agreement with Milliman Inc. to acquire portions of its wholly-owned investment consulting subsidiary Evaluation Associates LLC (, which is based in Norwalk, Conn. The acquisition (terms were not disclosed) is expected to close by the end of the second quarter. In a related transaction, Callan Associates Inc. ( of San Francisco will acquire from Evaluation Associates its public sector investment consulting business.

North America experienced the largest absolute gain of any regional wealth market in assets under management, at $3.6 trillion, and the second-highest growth rate, at 10.2%, according to a new report from The Boston Consulting Group entitled Shaping a New Tomorrow: How to Capitalize on the Momentum of Change. The wealth management sector worldwide is expected to expand at a compounded annual rate of 5.9% from year-end 2010 through 2015-to about $162 trillion. The growth is being driven by the performance of the capital markets and economic growth in emerging markets, the report stated.

Another study conducted by Boston Consulting Group shows that since 2006 wealthy U.S. individuals have pulled most of their money from Swiss private banks and could withdraw completely due to a global clampdown on tax evasion and an extended tax dispute between U.S. authorities and Switzerland's largest bank, UBS. North American assets held in Swiss private banks fell to just 2% of the total in 2010 from 18% in 2006, according to BGC's Global Wealth 2011 report. Go to for further information.

The Morningstar 1000 Hedge Fund Index, a composite of the largest hedge funds in Morningstar's database, increased 2.5% in April, while the currency-hedged Morningstar MSCI Hedge Fund Index rose 1.6%. Although all hedge fund strategies tracked by Morningstar climbed higher this month, most fell short of the S&P 500's 3.0% rise, according to the index. "Trend-following strategies in particular profited from the market's momentum by taking advantage of surging commodities prices, strengthening credit markets, and a depreciating U.S. dollar," commented Mallory Horejs, alternative investment analyst for Morningstar. For further information go to


The Ernst & Young Inaugural Global Growth Forum, a gathering of leading CEOs, executives, top investors, public policymakers, and other experts, will be held June 6-8 at the Washington Hilton in Washington, DC. For further information go to

The Deutsche Bank 2011 Global Financial Services Investor Conference will be held June 7-8 at the Pierre Hotel in New York City. Go to for further information.

The Keefe, Bruyette & Woods Diversified Financial Services Conference will be held  June 8 in New York City. Go to for further information.

The William Blair & Company 31st Annual Growth Stock Conference will be held June 14-16 at the Four Seasons Hotel in Chicago. Go to for further information.

The Family Office Exchange will hold a workshop, "A New Look at the Roles and Responsibilities of Grantors, Trustees and Beneficiaries," June 15-16 in New York City. Go to for further information.

The St. Petersburg International Economic Forum: Emerging Leadership for a New Era will be held  June 16-18 in St. Petersburg, Russia, with a focus on business opportunities there and the growing role of major emerging markets in defining the post-crisis economic environment. Go to for further information.

BNP Paribas China Equities-The Final Frontier, US-listed China Equities Conference
will be held June 20 at the Landmark London Hotel in London. Go to for further information.

The Tel Aviv Annual Institutional Investment Conference will be held on June 20 at the Hilton Hotel in Tel Aviv. Hosted by DC Finance, this year's theme is "Investments, Risk Management and Regulation in Times of a Global Economic Recovery Alongside Instability in the Middle East." Go to for further information.

Opal Financial Group's Annual Family Office/Private Wealth Management Forum, designed for high-net-worth individuals and family offices in North America, will be held July 18-20 at the Hyatt Regency Newport in Newport, R.I. Keynote speakers include Martin Feldstein, who sits on President Obama's Economic Recovery Advisory Board, and George F. Baker, professor of economics at Harvard University. Go to for further information.

On The Move

National Advisors Trust, headquartered in Overland Park, Kan., has added four new members to its board of directors, who each will serve three-year terms: Steven Palmer, co-founder of Atwood & Palmer Inc. of Kansas City, Mo.; H. Chandler Taylor, a principal of the Moneta Group in St. Louis; and Charles E. Clapp III, president of Howland Capital in Boston.

First Republic Bank, a San Francisco-based provider of private banking, private business banking and wealth management services, has hired Betsy Sullivan, a former vice president at Boston Private Bank, as managing director and relationship manager at the firm's office in Boston.

Charter Private Bank, which serves privately-held businesses and professionals in the Seattle area, and First Private Bank & Trust of Los Angeles, have merged with and adopted the name of Boston Private Bank & Trust Company, a network of private banking and wealth management organizations.

Family Office Exchange, a Chicago-based organization that supports wealthy families and their advisors with research, consulting, networking opportunities and education, has hired Leigh Faber as director of business development. Faber previously served as a project consultant with Huron Consulting Group and was an investment analyst for Santa Fe Investment Advisors, a family office/fund of funds.

HighTower, a Chicago-based financial services company serving high-net-worth and institutional clients, has expanded its presence in California with a new advisor team, the Blanke Schein Group of Palm Desert, Calif.-the second group to join HighTower from the Palm Desert area in the past month. Blanke Schein is led by William F. Blanke, Robert L. Schein, and J. Michael Shields, all of whom will serve as partners and managing directors at HighTower.

Peregrine Asset Management Inc. in Chicago has promoted John M. Courtright, a managing director since 2008, to president.

BNY Mellon Wealth Management has appointed Boryana Zeitz as senior portfolio manager to serve the firm's high-net-worth clients in the Southern California region. Previously, Zeitz was a trust and estates attorney at Katten Muchin Rosenman LLP and served as a business analyst at Deloitte Consulting.

-Cort Smith