The good news: ultra-wealthy individuals tend to put their trust in wealth managers. The bad news: most, still cautious after the financial meltdown, tend to use multiple advisors.
"Wealthy investors typically have many advisors, including accountants and attorneys," says Michael Farrell, managing director for SEI Private Wealth Management. "Financial advisors can add value by acting as wealth managers. They have to act as co-pilot. In that role, wealth managers can interpret myriad advice from all the other advisors and show the client how to work it into the overall plan."
According to an SEI survey of multi-millionaires, respondents continue to use financial advisors. Responding to the question, 'When it comes to difficult financial decisions, from whom do you feel most confident getting advice?', 39% selected "wealth advisor," far ahead of "attorney/accountant," in second place with 22%. Wealth advisors were the top choice of 53% of retirees, 48% of those 50-59 years old, and 46% of those 60 or older.
Ultra-wealthy investors remain insecure about their wealth. Average multi-millionaires believe they would only feel financially secure with double the assets they have. Those under the age of 50 would need more than three times their current net worth to feel financially secure.
SEI teamed up with Scorpio Partnership to poll 162 multi-millionaires last year. The retirees, business owners, and corporate executives responding to the survey had $11.8 million in average assets. Typically, the wealth target to achieve a level of financial security was $22.8 million, nearly twice as much as respondents' current net worth. Among respondents under age 50, with average net worth of $5.5 million, the average response indicated they would need $19.7 million to feel secure.
Even the wealthiest clients want to keep accumulating more wealth. So how can advisors help their ultra-wealthy clients meet their goals, while attracting similar clients?
"We have found that a robust, deep discovery process is vital," Farrell says. "A lengthy face-to-face meeting that includes family members can reveal the most critical issues for those ultra-wealthy individuals."
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