When an investor is looking to find an advisor for investment assistance, they are very likely to turn to friends and family for names and contact information.
A Spectrem’s Millionaire Corner study from 2012 showed that 46 percent of Millionaires turn to friends and family to get a referral for a new investment advisor. There are a lot of other ways that a person can find an advisor, but 10 percent of the study group said that their new advisor made first contact.
The Millionaire study investigated the trends of investors with between $1 million and $5 million in net worth not including primary residence.
The Securities and Exchange Commission offers advice on what you need to know before you choose an advisor, but to find an advisor, its best to know someone who already has one in mind. Besides advisors making first contact, the other most frequently selected option as attending a seminar or special event in order to find an advisor.
Once an investor has a few names to consider, their next step is usually to ask questions. The SEC suggests an investor find out how an advisor is paid, the services offered, the products offered, and whether the advisor is licensed, registered or certified with either the state, the SEC or the Federal Industry Regulatory Authority.
But some investors are trying to find an advisor because they have left their previous advisor. The No. 1 reason for investors to leave their advisors is lack of proper, timely and frequent contact.
The Millionaire Corner survey said that 58 percent of Millionaires would change their advisor because he or she did not return phone calls in a timely manner. Forty-nine percent chose “not being proactive in contacting me” as a reason, and 44 percent said “not returning emails in a timely manner.”
The other reason that got more than 50 percent selection from the study group was “not providing me with good ideas and advice’’.
Here’s good news: sixteen percent of Millionaires in the study said they could not think of a reason for firing their financial advisor. Only 4 percent said they were likely to replace their current advisor in the next 12 months, although 17 percent of investors 44 and younger said they were likely to do so.
There were segments of the Millionaire study group looking to add a financial advisor (15 percent of those 44 years of age and younger, and 11 percent of those between the ages of 45 and 54). Fifty-eight percent of investors said they were likely to recommend their own advisor to someone they know.
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.