In a recent survey, Spectrem Group asked a group of HNW investors if concerns about Bernard Madoff, and his recent Ponzi scheme scandal, would affect their usage of financial advisors, and the answer was no.

A robust 69% said that would make no difference whatsoever in their use of advisors – which is good news for advisors, though somewhat surprising. A previous survey asked investors how Madoff would affect their choice of advisors and many said they would be hesitant to use a smaller firm because of concern about custodial issues. Perhaps it is Madoff’s upcoming trail that has made people feel more confident, but whatever the reason, smaller firms need to communicate that they have the custodial issues handled and how. Though investors are saying they were no affected by Madoff, there may be more to it than previously thought, and now is the time to reassure investors, especially at smaller firms.

    Though Madoff’s villainy has been astounding in its depth, breadth, and callousness, it seems to have not greatly affected the ways in which HNW investors interact with their advisors. Perhaps the affluent feel they would not be fooled in the same way Madoff’s victims were, but whatever the reason, the majority of them feel secure...at least as secure as anyone feels at this time.

  Whether it is the Madoff scandal, the overall economic crisis, or some combination thereof, HNW investors are having some trouble trusting. One investor at a recent Spectrem survey group was quoted as saying, “I don’t even trust my brother at this point”. Building back up the trust that has been abused by many (even if not by you) will be an ongoing effort, but one that will be worth it when we rise out of this current trough.

  Regardless of the influence or Bernie Madoff’s larceny on perceptions of advisors, the HNW, who are usually a few steps ahead of the average investor, are watching carefully and will react nimbly when they determine a good path. Advisors should stay in touch without hovering, assuage any fears they can, and keep abreast of the current trends to assist their clients with their future investments and financial plans.

Learn More: Ten Critical Recommendations for Independent Advisors Post-Madoff

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