Wealthy investors list the providers they respect and the providers they use.
For many affluent investors, there is an understanding and evaluation of the many companies that offer financial services. A Spectrem study provides information on which companies investrors use and which companies investors respect.
In the Spectrem wealth segmentation series study Asset Allocations, Portfolios and Primary Providers, investors were asked to identify the investment firms they believe are superior in a number of areas. Investors were allowed to select as many companies as they wanted to. According to that study, Vanguard, Fidelity and Charles Schwab scored high marks across most categories.
In our earlier Spectrem study Advisor Relationships and Changing Advice Requirements, investors were asked to identify the one bank, provider and advisor firm they work with primarily. As we discover often in our daily lives, perception does not always equal reality.
An examination specific to Ultra High Net Worth investors with a net worth between $5 million and $25 million tells the story. Asked to name the company with the most talented advisors and staff (and being allowed to pick all that apply), UHNW investors listed Vanguard first, Fidelity second, and JP Morgan Chase third. However, when asked to name the providers they actually work with, Fidelity was selected by 15 percent of investors, Charles Schwab by 14 percent and Vanguard by 11 percent. Schwab was not among the top five companies named from the first question.
Vanguard, notably, was listed first by UHNW investors in almost every category of specific skill and service, including most expertise in handling money, most innovative products and services, most trustworthy and transparent, and most likely to increase usage of. However, Vanguard finished third among specific providers, and fifth among the company with the best advisors. This sort of dichotomy between the perception of Vanguard and the actual use of Vanguard is seen in all three wealth segments, especially in terms of the advisors used.
For the specific question, investors were given definitions of primary provider and primary advisor, and then were asked to name the company with whom they worked. While Fidelity took the top spot for provider and advisor firm in all three wealth segments, Edward Jones was the No. 1 advisor firm among Mass Affluent investors with a net worth between $100,000 and $1 million, and Merrill Lynch was the top advisor firm among UHNW investors. Millionaires, with a net worth between $1 million and $5 million, chose Fidelity No. 1.
In terms of perceptions, Vanguard, Fidelity and Charles Schwab were the three firms that were at or near the top of the list in all categories of service and skill in all wealth segments. The one question that produced unique responses was “the firm most likely to increase usage of”, in which BMO Harris was ranked third among Mass Affluent investors, and Wells Fargo was ranked third among Millionaires.
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.