- Respondents said decisions about overall asset allocation were most frequently decided by family advisors, family office executives and professional financial advisors
- A professional financial advisor is used in 41% of cases for overall asset allocation, and a family advisor or family office executive in 38%
- Wealth advisors have either a strong influence or some influence on ultra-high net worths’ goals; Family business strategy or partners and affiliates were the second-most influential entity; Parents were a strong influence for a third of ultra-high net worth individuals and spouses for a quarter
Financial Advisors have a bigger role in investment decision-making for North American ultra-high net worth families than any other family member, group or committee, according to a new study from Morgan Stanley Private Wealth Management and Campden Wealth Research.
The study among 59 individuals from families with net worth in excess of $25 million asked specifically how they made decisions about overall asset allocation, investing in a specific opportunity and divesting from a specific vehicle. Respondents said these were most frequently decided by family advisors, family office executives and professional financial advisors.
A professional financial advisor is used in 41% of cases for overall asset allocation, and a family advisor or family office executive in 38%. These same non-family members also help make decisions about specific opportunities in 44% and 35% of cases respectively, and to divest in vehicles or companies 41% each of the time.
“The fact that ultra-high net worth individuals appear to listen more to their financial advisors than their own family members shows the premium placed on good, professional investment advice,” said David Bokman, Head of Ultra-High Net Worth Resources for Morgan Stanley.
The results are contained within the newly published ‘Family Decision-Making’ report, which examines decision-making within ultra-high net worth families in North America. The influence of financial advisors is a recurring theme through the findings, but is particularly prevalent around investments.
Asked how much influence key stakeholders inside and outside the family had on ultra-high net worths’ goals, 89% said their wealth advisors had either a strong (50%) influence or some (39%) influence. This was higher than any other stakeholder, inside or outside the family.
Family business strategy or partners and affiliates were the second-most influential entity (44% strong influence and 40% some influence). Parents were a strong influence for a third of ultra-high net worth individuals and spouses for a quarter.
Commenting on the findings, Dominic Samuelson, Chief Executive Officer, Campden Wealth said: “Financial Advisors play a very important role in family decision-making, and enjoy a special – and often very select – place at the table of these ultra-high net worth families. In seeking to service them as best they can, Financial Advisors should look to gain as wide an understanding into families as possible and think about their complete needs.”
“The more that Financial Advisors can understand, the more holistic advice they can offer, and the more families will gain from their interactions. Financial Advisors may even wish to be explicit about their desire to gain more knowledge into the family from the outset to help fast-track this process,” added Mr. Bokman.