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A lack of trust has prompted 25% of affluent investors to move at least some of their business to new financial services providers.
Together, two Spectrem studies of individuals who have $500,000 or more in investable assets paint a disturbing picture for the industry. Trust has declined among 38% of affluent investors during the past few years and remained unchanged for another 52%. Only 10% of affluent investors say their level of trust has increased.
This is of particular concern because wealthy investors say they value honesty and trustworthiness most in a financial advisor.
Revelations of wrongdoing in the financial services industry clearly have taken a toll. Affluent investors, an important group for the health of the industry, aren’t as trusting as in the past.
“There was a conflict of interest in every piece of advice I was given,” said one of the individuals who participated in the studies.
Trust also factors into the provider selection process. When asked to list expectations for their financial advisors, 87% of affluent investors chose “confidence and trust.” Next were “customized solutions” (72%), “professional registrations and licenses” (71%), “handles all facets of my financial services” (70%) and “discusses my financial goals” (69%).
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High Net Worth Advisor Insights Newsletter April 2008
