Two recent studies suggest a shift in how much the rich trust their advisers to manage their wealth. Since the recession, they've been spreading their assets among multiple advisers, rather than trusting one to make all the investment decisions. And wealthy investors under the age of 50, who are more likely to own their own businesses and have higher incomes, are quicker to leave a financial firm that doesn't meet their needs for technology and customization, and to seek advice elsewhere.
Cerulli Associates Inc., which polled 400 U.S. households with at least $10 million in investable assets, found that 57 percent are working with five or more financial advisers and 64 percent are working with at least four. In 2008, only 16 percent were working with four or more advisers.
Over the past 12 months, according to Cerulli, 44 percent of the wealthy have changed their primary adviser. Fear is the driving factor behind these numbers, mostly due to losses suffered during the recession and perhaps to the highly-publicized Ponzi scheme concocted by Bernard Madoff that bilked wealthy investors out of billions. The wealthy are increasingly uncomfortable with all their assets in one basket, so to speak.
Another study, by Cisco Internet Business Solutions Group, shows that 80 percent of wealthy investors surveyed have spread their assets over more than one firm, with more than a quarter of them at four or more firms.
Wealthy investors under age 50 are even more likely to consult with more than one adviser, according to Cisco, and they are also more likely to switch if their needs aren't being met. But despite their relative elusiveness, it's a lucrative market for advisers. The Cisco survey says this small but mighty group holds 28 percent of wealth across all asset classes in the U.S., and is poised to inherit substantial amounts from the older generations.
The younger rich are also more likely to demand interaction with financial advisers through social media outlets. According to Cisco, 55 percent of these respondents have used social networking for investment advice.
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