Last updated: 13:37 / Tuesday, 14 January 2014
New Cerulli Research

U.S. HNW Investors Average More Than 4 Investment Provider Relationships

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U.S. HNW Investors Average More Than 4 Investment Provider Relationships
  • High-net-worth investors continue to steadily diversify their advice providers, says Cerulli
  • Their primary provider controls at least 90% of their investable assets
  • The damaged trust of financial institutions post-crisis doesn't stop the provider relationships
  • The investors will elect channels with greater autonomy, flexibility and variety of services

New research from global analytics firm Cerulli Associates finds high-net-worth investors in the U.S. maintain an average of 4 investment provider relationships. 

"Wealth provides many investors with the privilege of benefiting from institutional products and prices across asset managers, and it also grants them the ability to leverage their status among providers and advisors," states Donnie Ethier, associate director at Cerulli. "High-net-worth investors continue to steadily diversify their advice providers." 

Cerulli's latest report, High-Net-Worth and Ultra-High-Net-Worth Markets 2013: Understanding the Contradictory Demands of Multigenerational Wealth Management, analyzes the U.S. high-net-worth (HNW), with investable assets greater than $5 million, and ultra-high-net-worth (UHNW), with investable assets greater than $20 million, marketplaces. 

"Overall, high-net-worth investors appear reluctant to terminate existing relationships," Ethier explains. "In fact, nearly one-quarter of high-net-worth households report their primary provider controls at least 90% of their investable assets." 

A financial services provider that has a longstanding relationship with a high-net-worth investor must recognize that the client is already working with other providers, or, at least, the odds of their willingness to do so. Providers need not panic, because it may be that investors simply value skillsets at different firms, says the report.

"Many high-net-worth investors have moved on from the financial crisis, including recovered assets, optimistic economic outlooks, risk tolerances, and product mix," Ethier continues. "The damaged trust of many financial institutions post-crisis seems to be a non-factor in the recent increase in provider relationships." 

Cerulli believes the modern trend of investors electing channels that offer greater autonomy, flexibility, and a wide variety of services will continue, and that we may not see a contraction of advice providers until the next generation of beneficiaries elects their own preferred wealth management channels.

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