Not all investors switch their advisors, but those that do have their reasons.
The relationship between an investor and the financial advisor with whom he or she works can be beneficial, and it can be friendly. It can also be tenuous, and not necessarily just because of matters related to money, or portfolio performance.
Spectrem’s Perspective Why Investors Switch Advisors examines the reasons investors choose to leave one advisor and find another.
Beginning at the beginning, 58 percent of investors have switched advisors at one point or another, and 34 percent have done so in the last five years, when investments and the overall picture of the economy have been improving following the recession.
It takes time for a relationship to sour, so it is not surprising that many Millennials (68 percent) are still on their first advisor. But almost one-third of investors who were born during World War II have never changed their advisor over their many years in the investment business.
But focusing on the reasons investors switch advisors shows that the decision to move on is not always about how the advisor is doing at improving the wealth of the investor.
The top reason given for switching advisors, selected by 24 percent of those who have switched, is “not being proactive in contacting me.” A recent survey of affluent investors by Millionaire Corner found that 17 percent of investors never received a call from their advisor following the recession in 2008.
According to the Perspective, 34 percent of Millennials demanded an advisor who would place a call or send an e-mail when communication was required.
The second most-selected answer did have something to do with performance. Twenty-three percent switched advisors because “advisor did not provide me with good ideas or advice.” This was especially true for the wealthiest advisors; 33 percent of those with a net worth between $5 million and $25 million expressed that as a reason to switch advisors. Also, 32 percent of Millennials expressed that concern.
Getting to the bottom line, 22 percent said “advisor was under-performing compared to the overall stock market’’ as a reason they switched advisors. This was true, once again, for the wealthiest investors, for the Millennials, as well as for the World War II investors who are watching their net worth closely.
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.