Only 13% Of Investors Keep Their Parents' Advisors, Survey Says

Advisors still have a lot of work to do if they want to retain their clients’ children and heirs, according to new research by Cerulli Associates.

A new survey shows that only 13 percent of affluent investors choose to work with the same advisors their parents used, according to the research firm.

Of those who didn't use their parents' advisor, 88 percent said they never even considered doing so.

This problem looms large, given that about $60 trillion in assets is poised to pass between generations over the next 25 years, Cerulli said.

Advisors need to be reaching out to the young inheritors of the families they serve before the wealth transfers happen, but most advisors are not taking that proactive approach.

"Unfortunately, this process is rarely at the forefront of advisory practices’ priority list," said the Cerulli report. Advisors are often too busy attracting and servicing current clients.

The report suggests it's wise to reach out to inheritors early.

Younger heirs were more likely to stick with parents’ advisors, however: Among affluent investors under 50 years old, according to the survey, 24 percent retained their parents' advisors after a wealth transfer. But that dropped to 9 percent for investors who were 50 years and older.

Meanwhile, only 5 percent of those in the older group said they at least considered retaining their parents' advisors before switching to someone else, compared with 21 percent of those under 50.

"This inflection point at age 50 highlights when many investors [get] serious about their investment portfolios," the report stated. "With several decades of work experience, these investors are likely to have accumulated several hundred thousand dollars in retirement plan assets and are more likely to expend time and effort on choosing [an] advisor."

The online surveys involved up to 10,000 households and were conducted throughout last year by Phoenix Marketing International, according to Cerulli. Respondents had either a minimum of $250,000 in investable assets or more than $125,000 in household income.