Study: Do most affluent investors prefer a single financial services provider?

When it comes to affluent investors, do they prefer having multiple specialists or a single financial services provider?

According to research from Cerulli’s U.S. Retail Investor Advice Relationships 2024 report, eight out of ten (82%) affluent investors who are considered “Advice Seekers” may prefer a single financial provider.

However, the survey pointed out, that they’re actively monitoring the landscape for better solutions. Providers engaging with this cohort of investors will need to consistently remind them of the breadth and quality of their platforms to remain top of mind as clients’ preferences evolve.

Scott Smith, director, Advice Relationships at Cerulli Associates, explained that in Cerulli’s lexicon, a financial advisor is the person the client speaks with most regularly, while the provider is the firm that employs them.

Some affluent investors seek an increase in financial advice

Advice Seekers represent the segment of the affluent investor market interested in increasing the level of advice they are receiving, usually by adding a new financial advisor or leaning on their current advisor more heavily, Smith added.

He then shared the following chart with comparative segment characteristics:

The survey pointed out that while Advice Seekers default to a preference for incumbent providers, until they firmly establish a trusted advisor relationship and likely migrate to the Advisor-Reliant Segment, Advice Seekers will be searching for solutions that may better match their requirements.

Advice Seekers represent 17% of affluent investors and report, on average, a relationship length of 8.0 years, including 46% of investors who have relationships of fewer than five years. This is 11 percentage points higher than any other behavioral advice-orientation segment.

After beginning a relationship, 93% of Advice Seekers indicated that they look to their current provider when considering adding a new product or service. Yet, a sizeable number (41%) of Advice Seekers plan to switch some or all their assets to another provider in the next 12 months.

“Despite high overall satisfaction levels—92% of Advice Seekers believe their financial advisor can solve their financial needs—this cohort is not yet committed,” added Smith. “While an advice provider may initially serve the needs of an affluent investor, their preferences may change, and until they firmly establish a trusted advisor relationship, they may look elsewhere.”

What Advice Seekers are interested in

Given Advice Seekers’ high overall satisfaction with financial advisors, it's imperative that providers make every effort to supply Advice Seekers’ advisors with the resources they need to help them highlight the quality of their advice offerings, the survey said.

“As a cohort,” Smith explained,” Advice Seekers are interested in expanding the breadth and depth of their advice relationships more than any other group of affluent investors. They also expect an elevated level of support and collaboration to help guide them as they progress on their financial journey,”

Meeting the needs of Advice Seekers

As financial advisors work with Advice Seekers to make sure they are meeting their financial needs and goals, by far the most important aspect of working with them is listening to them, Smith said. “These prospects want to be sure their specific goal, preferences and concerns are at the heart of their advice relationship,” he pointed out. “However, many experienced advisors default into leading the conversation and recommending what they think is best before the Advice Seekers believe that the advisor is really ready,” he added.

“A key takeaway for platform providers is that the next generation of affluent clients, represented by Advice Seekers, has a high and broad set of expectations for the services that should be available to them,” Smith added. “To retain these clients, advisors will need to dedicate themselves to understanding their circumstances and goals and offer solutions every step of the way in order to secure their trust—and assets.”

The survey findings and more information are from The Cerulli Report—U.S. Retail Investor Advice Relationships 2024: Optimizing Advice Breadth.

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