SOURCE: Luxury Institute, LLC

Luxury Institute, LLC

September 15, 2015 09:55 ET

Luxury Institute Survey of High-Income Investors Reveals Generation Gap as Wealth Managers Excel With Older Investors but Struggle With Satisfying Younger Clients

NEW YORK, NY--(Marketwired - September 15, 2015) - A new survey of high-income investors by the independent and objective New York-based Luxury Institute provides rich detail on clients' relationships with their financial advisors, including the attributes they seek out in a wealth manager, and how they evaluate their own advisor's performance. Respondents were all 21 years of age and older, with minimum annual household income of $150,000.

Just under half (46%) of affluent investors use a wealth advisor to help manage their assets and investments, and the good news for wealth mangers is that most of these clients are highly content with their current advisor relationships. More than two-thirds (68%) report high satisfaction with their primary wealth manager and 63% say that they would recommend their advisor to family and close friends.

These clients are also loyal, having been with their current wealth manager for 11 years, on average, and most of them having no plans to defect anytime soon. Nearly three out of four (73%) high-income clients of wealth management firms say they are "highly likely" to continue working with their current advisor. Clients of full-service brokers and independent advisors report similarly high levels of satisfaction and loyalty, and significantly higher than other types of advisors, like accountants, online brokers, private banks, and insurance companies.

Despite the high levels of overall satisfaction and loyalty, wealth management firms face challenges engaging younger clients with the same kind of success that they now enjoy with their older ones. Satisfaction peaks at 8.64 on a 0-10 scale with clients 65 and older, but drops steadily with decreasing age to its lowest level of 7.48 among clients under the age of 45. Similar generation gaps are also evident in younger clients' sharply lower levels of loyalty and decreased willingness to recommend an advisor.

Younger clients tend to want transparency in their financial relationships, and to base their choice of advisor on multiple sources of information, including the reviews of other clients. One-third of clients under the age of 45 say that they would participate in, and subscribe to, a ratings service that evaluated wealth management firms, similar to what Zagat Survey does for restaurants and hotels, and the ratings J.D. Power provides for the automotive industry.

According to clients of all ages, the most important (9.06 out of 10) attribute they demand from their wealth advisor is that they operate completely honestly and ethically. Other top qualities wealthy investors seek out in their advisors include whether they resolve any issues that arise quickly and completely (8.80), protect personal information with the utmost care (8.79), achieve acceptable returns in a manner consistent with my risk tolerance (8.76), and demonstrate expertise and thorough knowledge of investments. Of these top concerns, clients are most likely to agree that their primary wealth advisor exceeds expectations only in providing safe and effective Internet access to investment information.

On most of the attributes that clients consider important, there is a shortfall when it comes to the importance of a given attribute and what their current advisor is delivering. Performance gaps on most attributes are notably larger among clients of full-service brokers than they are for those who use an independent financial advisor.

Despite shortcomings on a number of individual metrics, primary wealth advisors are able to maintain relationships with clients because they score well on the attribute that correlates most strongly with satisfaction and loyalty: feeling that the advisor is worthy of fees paid. Clients of full-service brokers place a great deal of weight on having their wealth manager provide personal service and attention, while independent advisors' clients put a priority on making sure that any issues that arise are swiftly resolved.

"In preparation for a massive generational wealth transfer, firms need to replenish their current base of satisfied older clients and cultivate deep, meaningful relationships at the younger end of the age spectrum," says Luxury Institute CEO Milton Pedraza. "Contrary to the mythology that abounds, Millennials are human too. Winning over the younger affluents as they begin to have children and enter critical career earning years, you need to design and deploy a disciplined client-centric culture and empower every advisor to achieve mastery in high performance client relationships."

Survey respondents reported average income of $289,000, and $2.9 million average net worth.

About Milton Pedraza and Luxury Institute, LLC

Milton Pedraza is the CEO of the Luxury Institute. Over the past 12 years, Milton has established the Luxury Institute as the most trusted global luxury research provider, and the proven high performance luxury client relationships consulting firm. Known globally as the foremost resource for affluent and wealthy consumer insights and client experience best practices, the Luxury Institute has served over 1,000 global luxury goods and services brands across dozens of luxury goods and services categories.

Milton advises and coaches luxury CEOs and serves on the Boards of top-tier luxury and premium brands, and luxury startups. He is sought after worldwide for his practical, innovative and humanistic insights and recommendations on luxury and is the most quoted global luxury industry expert in leading media and publications.

Milton is also an authority on CRM Technology, Analytics and Big Data. Prior to founding the Luxury Institute, his successful career at Fortune 100 companies included executive roles at Altria, PepsiCo, Colgate, Citigroup and Wyndham Worldwide.

Milton was born in Colombia, raised in the United States, has lived in several countries, conducted business in over 100 countries, and speaks several languages.

For more information and additional insights from this survey and other research, visit www.LuxuryInstitute.com, or contact Luxury Institute CEO Milton Pedraza directly with questions (mpedraza@luxuryinstitute.com).

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