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Wealthy Turn to Independent Advisers: Spectrem

November 17, 2003 at 07:00 PM
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CHICAGO, Ill (HedgeWorld.com)–Americans in households that possess US$5 million or more in investable assets increasingly are avoiding traditional investment brokers and advisers, according to a study by the Spectrem Group.

These "Ultra High Net Worth" households are turning to independent advisers who specialize in financial and tax planning, said the study released Nov. 6.

"These findings represent a powerful wake-up call for Wall Street, demonstrating that the richest Americans are questioning the objectivity and performance of their brokers and seeking more independent financial advice," said Catherine McBreen, managing director of the Spectrem Group, Chicago. She added that financial services firms need to examine why their wealth management programs are not attractive to ultra-high-net-worth clients.

Spectrem Group is a strategic consulting firm that focuses upon the affluent and retired markets Previous HedgeWorld Story.

The specific findings of the new report include:

  • Only 30 percent of UHNW households use a full-service broker as their primary adviser. This is down from 41 percent in 2001. Of respondents under age 50, only 26%use full-service brokers.
  • Only 27 percent of those respondents who use a primary adviser give this advisor an "excellent" rating. Advisor ratings have been dropping since 2001.
  • Sixty-five percent of the respondents who use a primary adviser say they intentionally avoided advisers affiliated with a brokerage, bank, insurance or mutual fund company.
  • A full 50 percent of those who use independent advisers say they do so because they receive more objective advice.

There are an estimated 650,000 U.S. households that meet the definition of ultra high net worth, and the members of these households control up to one-third of U.S. investable assets.

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