SOURCE: Luxury Institute, LLC

Luxury Institute, LLC

August 11, 2015 09:22 ET

Luxury Institute Survey Shows Millennial and GenX Wealth Management Clients Prefer Independent Advisors, but Older and Wealthier Investors Remain Faithful to Full-Service Brokers

NEW YORK, NY--(Marketwired - August 11, 2015) - New research from the independent and objective New York-based Luxury Institute provides insights into wealth management relationships maintained by investors earning at least $150,000 per year. On average, respondents reported household income of $289,000, with net worth of $2.9 million.

More than three-fourths of high-income investors who use professional wealth managers work with either a full-service brokerage firm (43%) or an independent financial advisor (34%). Overall, 46% of high-income consumers surveyed use a wealth advisor to help them manage their investments, rising to 59% of those 65 or older and 62% of those with net worth of $5 million or more.

Age and wealth correlate strongly with propensity to pay a full-service broker for wealth management services, as a majority of 55-64 year olds (51%) and investors 65 and older (56%) report working with a full-service brokerage firm as a wealth management provider. Younger wealthy investors are much less likely to be brokerage house clients, with only 39% of 45-54 year olds and 27% of 21-44 year olds saying that they turn to big brokers for managing their investments.

Similarly, 36% of clients with a net worth less than $1 million work with full-service brokers, a percentage that jumps to 53% for so-called "pentamillionaires" with assets between $5 million and $10 million. Instead of the big wirehouses, investors with more modest levels of wealth turn more frequently to independent advisors: 37% of high-income clients with a net worth between $1 million and $5 million report using a smaller firm for wealth management services, while 27% of those worth more than $5 million say the same.

Independent advisors have a big edge on brokerage houses among Millennials and members of Generation X and Y, 45 and younger, 38% of whom work with an independent financial advisor, versus 28% of clients 65 and older who have an independent advisor as a wealth manager. Other firms more likely to provide wealth management services to younger high-income clients are private banks, online brokerages, and consumer banks.

Relationships with full-service brokers show remarkable longevity, with 35% of high-income investors saying that they've been with their broker for 10- 20 years. Just 26% of those using independent advisors say that they have had the same relationship duration with their wealth manager. High-income clients of wealth management firms have had a relationship with their primary advisor for 11 years, on average, rising to 13 years for those who use a full-service broker as their primary advisor.

A 57% majority of clients use a single wealth management firm to manage their finances, but 43% use multiple firms, usually those who are older and richer. Nearly two-thirds (64%) of individuals worth $10 million or more retain multiple advisors, compared to just 38% of those worth less than $1 million who have more than one wealth manager.

"Unless you have Warren Buffett managing your money, investment performance is basically a commodity since most managers, over time, tend to replicate the returns of the overall market," says Luxury Institute CEO Milton Pedraza. "What we have heard consistently and resoundingly for more than a decade from wealth management clients is that they seek out expertise, trustworthiness, and generosity in their wealth managers. These remain the key differentiation points between average and superior firms in the eyes of high-net worth investors."

Among the bigger brokerage houses, Morgan Stanley Smith Barney is getting the biggest share of the high-income market with 8% of respondents identifying their primary wealth manager. Other popular wealth managers among high-income clients are Wells Fargo (6%), Merrill Lynch (5%), and Fidelity (4%).

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, or contact Luxury Institute CEO Milton Pedraza directly with questions (

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