Friends and family provide advisor referrals to more investors than any other method.
When people are first looking for a financial advisor, more of them turn to friends and family than using any other method.
Spectrem’s Millionaire Corner report Relationships with Advisors demonstrates that almost 50 percent of investors at all wealth segments got referrals from a friend or family member to find their current advisor.
The Spectrem research looked at three different wealth segments: Mass Affluent (with a net worth between $100,000 and $1 million, not including primary residence), Millionaire (with a net worth of between $1 million and $5 million NIPR), and Ultra High Net Worth (with a net worth between $5 million and $25 million NIPR). Within each wealth segment, there was also a further segmentation for age.
The percentage of investors using referrals from friends or family were all but identical across all three wealth segments: 48 percent for Mass Affluent, 48 percent for Millionaire and 47 percent for UHNW.
Similarly, across all three segments, the youngest investors were more likely to have found their current advisor through friends and family, perhaps because older investors change from their first advisor as they get more experienced or make other contacts. Sixty-eight percent of UHNW investors ages 47 and under got a referral from a friend or family member, 62 percent of Millionaires ages 44 and under and 60 percent of Mass Affluent investors ages 44 and under.
As to how the rest found their current advisor, the answers are far afield. The second most popular specific answer is “the advisor contacted me”, with 9 percent of Millionaire investors, 9 percent of Mass Affluent and 7 percent of UHNW investors saying that is how they found their current advisor.
Few other answers garnered even 5 percent of investors (“other’’ was selected by at least 20 percent in each wealth segment). Among Mass Affluent investors, “seminars/special events” was selected by 7 percent, “general advertisement’’ by 6 percent and “investigating a certain product and advisor specialized in that product” by 6 percent.
Among Millionaires, 8 percent chose “seminars/special events”, and 6 percent chose “investigating a certain product…”. UHNW investors had similar choices – 6 percent from “seminars” and 6 percent from “investing a certain product…”.
Apparently, web sites are not the answer currently. Only 2-3 percent of investors in any wealth segment found their current advisor from a “website that provides detailed information on advisors.”
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.