The Department of the Treasury and the Internal Revenue Service released new guidance that is “designed to expand the use of income annuities in 401(k) plans.”
By Cyril Tuohy
Call it the value of values.
The new wealthy – those up-and-coming Generation Y entrepreneurs who are building tomorrow’s billion-dollar companies – are constantly searching for advisors who can combine value with values, a new study finds.
The study, titled “The Futurewealth Report 2014,” also found that selecting a wealth advisor is a long and painstaking process for this emerging high-net-worth segment.
“What we’re seeing from investors and what the study’s findings support is that the process for selecting a wealth manager is not a random one, but rather an inquisitive, investigative, and exhaustive search for the best partner,” said Ryan Hicke, senior vice president for the SEI Wealth Platform.
The report, published by SEI, Scorpio Partnership and NPG Wealth Management, surveyed 3,025 respondents around the world with an average net worth of $2.9 million. The report is designed to shed light on the psyche of tomorrow’s very rich.
Asked to choose the most important attributes when picking a wealth manager, 74 percent of the respondents said it was the advisor’s reputation for delivering quality products and services, and 64 percent of respondents said it was fees charged by an advisor.
Although reputation and cost were leading factors in choosing an advisor, performance was the top factor in respondents deciding to stay with their primary wealth advisor, the survey found.
The young and very rich tend to work with three or four advice providers for their personal investments, and, on average, entrust half their investable wealth (51 percent) to a primary advisor, the survey also found.
High-net-worth investors are “constantly searching for a more valued relationship,” and are more than happy to switch advisors to make that happen, said Kevin Crowe, head of solutions for the SEI Advisor Network.
“That creates a strong opportunity for advisors to foster a personal connection with these wealthy individuals by getting to know them and their entire financial picture,” he said.
High-net-worth individuals follow multiple avenues when engaged in the search for a wealth advisor, the study also found.
More than one-fifth – 22 percent – said they seek advice of friends and family before making a selection, the study found. A full 15 percent conduct their own research of the advisor market, the survey also found.
In the U.S., the advisor marketplace is as broad as it is deep. Advisors come in all flavors, including sole practitioners hanging a shingle on Main Street, securities licensed advisors at regional broker/dealers and registered investment advisors (RIAs) working for nationwide wirehouses.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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