Wealthy Investors Looking To Change Advisors

It looks like the market sell-off is causing wealthy investors to start getting a little nervous (see a recent Wealth Report blog post). A new survey by Prince and Associates has found that 81 percent of investors with over $1 million of assets available for investment plan to take some of their assets away from their current advisor, with 86 percent recommending that other investors do the same. Just 2 percent plan to recommend their firm to others. The larger brokerages and banks appear to be taking the lion's share of the blame, with 90 percent of clients with large brand firms planning to move money away from their current advisor, with 70 percent moving all assets. Only 29 percent of investors with smaller firms (with more personalized service) plan to withdraw funds. Of course, this always begs the question: "What do you then do with the money?" More than likely it will just move to another advisor, although smaller firms may see a net increase in accounts and funds. The movement of money often corresponds with the movement of advisors (see an On Wall Street article). Ironically, it is often during times like this when most small (and large) investors realize that they actually need help. In the late 1990s, when investors felt they could just throw a dart at the stock tables, many felt they were a market genius, or at least believed they did not need to pay for genius advice. After the crash, both portfolios and attitudes quickly changed. I suspect we will see a similar interest in professional money management given the recent market corrections and volatility, even as the deck chairs are shifting.