Key Takeaways
- Affluent investors are relying on financial advisors more than ever amid economic uncertainty, according to research from Cerulli Associates.
- Over two-fifths or 43% of affluent investors with over $100,000 in investable assets receive advice from financial advisors, up from 36% a year ago.
- Cerulli estimated that U.S. investors collectively hold about $55 trillion in total financial assets, a $10 trillion drop from the previous year after a tough year for markets in 2022.
- Wealthy investors with advisors cited personalized investment planning as their main reason for turning to a professional.
Affluent investors are working with financial advisors more than ever, turning to advisors for customized investment strategies amid economic uncertainty, according to Cerulli Associates research released Tuesday.
The share of affluent investors with household investable assets of at least $100,000 relying on an advisor grew to 43% this year, up from 36% in the past year, the research firm said.
“As the mass affluent grow increasingly focused on asset preservation, Cerulli’s research has documented an increased appetite for financial advice as well as a willingness to pay for it,” the firm said.
The shift comes after a tough year for markets and retirement savings in 2022, with Cerulli estimating that American investors collectively hold about $55 trillion in total financial assets, down from $65 trillion last year.
And while nonfinancial assets such as real estate have made some gains "due to housing market growth, this has also slowed as high interest rates weigh on the demand for housing," the firm noted.
Today, more than half (55%) of advised assets reside within fiduciary advisory accounts, up from 34% in 2011, as “investors have chosen to move away from transactional brokerage relationships in favor of long-term advice relationships,” Cerulli said. Customized investment plans were a major factor driving people to turn to advisors, according to 67% of affluent investors surveyed.
“Affluent investors are passionate about making sure that their advisors are offering solutions customized to their needs and goals,” said Scott Smith, director at Cerulli, adding that “to align themselves with these priorities, advisors must dedicate themselves to understanding the circ*mstances, preferences, and goals of each client household.”
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FAQs
Affluent investors are relying on financial advisors more than ever amid economic uncertainty, according to research from Cerulli Associates. Over two-fifths or 43% of affluent investors with over $100,000 in investable assets receive advice from financial advisors, up from 36% a year ago.
Why do wealthy people use financial advisors? ›
Wealth advisors help their clients with just about everything connected to their financial world and may even offer a few services that don't seem financially related. Here are some services that wealth advisors can offer: Investment management. Estate planning.
What percentage of millionaires use financial advisors? ›
The study reveals that 70% of millionaires work with a financial advisor, compared to just 37% of the general population. Moreover, over half (53%) of wealthy individuals consider their financial advisors their most trusted source of financial advice.
Are financial advisors a waste of money? ›
Hiring a financial advisor can seem like an unnecessary expense but they often save you money in the long run. If you choose to hire a financial advisor, make sure all their fees are transparent before you sign. A financial advisor is usually recommended when their fee is less than what they save for you.
Can financial advisors beat the market? ›
In other words, even professionals can't beat the market with consistency. That means that the right expectation is typically to target a portfolio that tracks the market as closely as possible with a balance between risk (stocks) and stability (bonds) that matches your goals and risk tolerance.
How do financial advisors work with billionaires? ›
The factors a billionaire's advisor considers include goals and objectives, risk tolerance, tax status, cash flow needs and entity structure in order to build an appropriate portfolio, Harding says.
Do financial advisors really help? ›
Developing a strategy. A financial advisor can help you hone in on your goals and map out a way to achieve them. This can be anything from starting to invest, buying real estate, saving for an emergency or retirement, or something else.
Are financial advisors worth the 1% fee? ›
But, if you're already working with an advisor, the simplest way to determine whether a 1% fee is reasonable may be to look at what they've helped you accomplish. For example, if they've consistently helped you to earn a 12% return in your portfolio for five years running, then 1% may be a bargain.
At what level of wealth do you need a financial advisor? ›
Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more.
Can a financial advisor make you a millionaire? ›
So can a financial adviser make you rich? The answer is yes. But it would take a very long time unless you already have a reasonable amount of money. Definitely one of the key benefits to working with a financial advisor is long term slow wealth creation and wealth protection.
A financial advisor is worth paying for if they provide help you need, whether because you don't have the time or financial acumen or you simply don't want to deal with your finances. An advisor may be especially valuable if you have complicated finances that would benefit from professional help.
Who is the most trustworthy financial advisor? ›
The Bankrate promise
- Vanguard.
- Charles Schwab.
- Fidelity Investments.
- Facet.
- J.P. Morgan Private Client Advisor.
- Edward Jones.
- Alternative option: Robo-advisors.
- Financial advisor FAQs.
Paying for advice doesn't guarantee that you'll avoid all market losses. But if you're feeling squeamish about the way these investments were presented to you and how they were described, it's worth reviewing your financial advisor's credentials and assuring you're working with someone legit.
Should I ditch my financial advisor? ›
If you're feeling compelled to move on from the relationship, trust your gut, there's probably a good reason. Most commonly, lack of attention or comprehensive financial planning. Also, your current advisor is used to clients leaving for a multitude of reasons.
Can your financial advisor drop you? ›
“Often, the reason for firing a client comes down to our ability to serve them well. Considerations for determining next steps include if our values align, if they fit our business model, are our personalities a good fit for each other,” said Laurie Humphrey of Granite Financial, which is part of Osaic.
What is the average return of a financial advisor? ›
Industry studies estimate that professional financial advice can add up to 5.1% to portfolio returns over the long term, depending on the time period and how returns are calculated.
Do high net worth individuals use financial advisors? ›
HNWIs Need Dedicated Financial Advisors
Their tax planning can be intricate. A financial advisor can craft a tailored strategy to meet the needs of high-net-worth clients and guide them through complex financial landscapes.
At what net worth do you need a financial advisor? ›
Generally, having between $50,000 and $500,000 of liquid assets to invest can be a good point to start looking at hiring a financial advisor. Some advisors have minimum asset thresholds. This could be a relatively low figure, like $25,000, but it could $500,000, $1 million or even more.
Who is most likely to use a financial advisor? ›
High-net-worth Individuals
High-net-worth individuals are a group of people that have over $1 million in investable assets and often seek financial advice to help them manage large assets.
Who needs financial advisors the most? ›
There are no specific ages, career points or salary levels when it becomes apparent that you need a financial advisor. Generally speaking, when your financial life is more complicated than simply depositing your paycheck and taking out money, it is time to find a financial advisor.
