High net worth wealth management can include a mixed approach involving self-directed, advisor-assisted and advisor-dependent strategies, according to Millionaire Corner research.
High net worth wealth management – the stewardship of investable assets of $5 million to $25 million – typically involves a mixed approach of self-directed, advisor-assisted and advisor-dependent strategies, according to Millionaire Corner research on the attitudes and behaviors of wealthy investors.
Most high net worth investors enjoy investing (60 percent) and like to be actively involved in the day-to-day management of their investments (58 percent), yet at the same time they tend to maintain close, long-standing relationships with financial advisors, according to a Millionaire Corner study completed in the first quarter of 2012.
Theses preferences result in a mixed approach for high net worth wealth management. A Millionaire Corner study completed in the fourth quarter of 2011 shows that the typical high net worth investor turns over 23 percent of his or her investable assets to the complete control of a financial advisor, and retains complete control over 43 percent of assets. For the remaining 34 percent, the investor consults a professional for high net worth wealth management strategies, but makes the final decisions himself.
“Some investors prefer to divide the responsibility for high net worth wealth management, and like to compare their own results with those of their advisors,” said Catherine McBreen, president of Millionaire Corner.
Investors most commonly seek advice for high net worth wealth management strategies concerning the selection of individual stocks and bonds, and diversifying assets away from a concentrated position, according to our research. Two-thirds of high net worth investors report receiving advice on product selection and asset allocation from their advisors, while 61 percent of investors say they have worked with an advisor to establish an investment plan.
Other commonly sought high net worth wealth management advice concerns minimizing the tax consequences of investments, establishing a sufficient cash flow, planning for retirement and creating an overall financial plan. Two-thirds of high net worth investors are comfortable with the fees they pay for these services and the majority prefers to pay a fixed fee for high net worth wealth management advice.
The financial firms most likely to provide high net worth wealth management strategies for these investors are Bank of America-Merrill Lynch, Morgan Stanley Smith Barney and Wells-Fargo-Wachovia, according to our research, which also shows that the primary financial service providers of high net wealth management services are Fidelity, Charles Schwab and Morgan Stanley Smith Barney. High net worth investors are most likely to bank at Bank of America-Merrill Lynch, Wells Fargo-Wachovia and JP Morgan Chase.
Nearly one-fourth (24 percent)of high net worth investors describe themselves as self-directed, making their own high net worth wealth management decisions without any assistance from an investment advisor, according to our research. More than one-fourth (27 percent) describes themselves as event-driven, making most of their own decisions, but using an advisor for specialized high net worth wealth management needs, such as retirement planning, asset allocation or alternative investments.
One-third is advisor-assisted, regularly consulting with an advisor, but making most of the final decisions, while 16 percent describe themselves as advisor-dependent, investors who rely on an advisor to make most or all of their high net worth wealth management decisions.