April 07, 2011 09:00 ET

SEI Report: Wealth Managers and Clients Differ on Definition & Importance of Independence

Only 1 in 3 Investors Believe Independence Is Attainable in Wealth Industry Relationships

OAKS, PA--(Marketwire - April 7, 2011) - According to research released today by SEI (NASDAQ: SEIC), in collaboration with Scorpio Partnership, while nearly three out of four (72 percent) investors regard "independence" as important or somewhat important, many investors believe that independence in a wealth industry relationship remains more a hope than an expectation.

At the same time, nearly all (93 percent) U.S. wealth management providers and 87 percent of all respondents, globally, consider achieving independence a business-critical issue. The findings are part of "Independence: The Right Standard," the second report in a series of five topic of interest papers examining the changing relationship between wealth managers and investors in the global market.

The report uncovers that the divergent views from investors and wealth managers on independence likely stem from the lack of a standard definition of the word. Among wealth management providers, nine distinct aspects emerged. Yet, the importance that managers place on these aspects varies greatly. When asked how they demonstrate independence to investors, 'no product pushing' emerged as the top choice among wealth managers, with 28 percent selecting it. Other aspects of independence, according to those polled, include open architecture (21 percent) and business controls (16 percent).

Asked the same question, investors had a different emphasis, preferring wealth managers build independence into core strategy and placing top importance on business controls (32 percent), open architecture (20 percent), and client-centric advisory process (16 percent). Interestingly, 'no product pushing' received a nominal number of votes by investors.

"In our current investing environment, clients are placing increased emphasis on the concept of the 'trusted advisor,' with independence taking a central role. It's encouraging that both sides place great value on independence, but there is a clear difference in opinion on the best course of action and the probability of wealth managers attaining full independence," said Jim Morris, Senior Vice President for SEI's Global Wealth Services. "With this research in hand, wealth managers are now better equipped to bridge this gap. They are well positioned to improve their relationships by delivering a clear strategy for accountability, corporate controls, compensation and commissions -- one that is aligned with what investors truly want."

The report did find that investors understand that establishing and consistently delivering independence is not easy for wealth management providers. And investors do realize that fees and commission on product selection are an impediment to achieving independence. Very few investors and even fewer wealth managers polled are calling for a solution where investors pay advisory fees. However, the research points to shareholding structures, reporting lines, and internal fee-sharing agreements as possible steps wealth managers can consider taking to achieve lasting independence.

Jim Morris, and Sebastian Dovey, Managing Partner of Scorpio Partnership, recently co-presented research from the topic of interest series and from the recently released Futurewealth Report at the ABA Wealth Management and Trust Conference on March 7, 2011.

The findings of this paper are the result of a series of in-depth interviews comparing the views of 250 private clients and wealth management providers, including banks, independent trust companies, and investment advisors, on the issue of independence. The purpose of this research is to gain insight into the importance of independence to both groups and its definition in the context of a financial advisory relationship. For a full version of the report, please visit

About SEI's Global Wealth Services
SEI's Global Wealth Services is an outsourcing solution for wealth managers encompassing wealth processing services and wealth management programs, coupled with business process expertise. The integrated offering aims to provide wealth management organizations the infrastructure, operations and administrative support necessary to capitalize on their strategic objectives in a constantly shifting market.

About SEI
SEI (NASDAQ: SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of December 31, 2010, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $416.0 billion in mutual fund and pooled or separately managed assets, including $172.3 billion in assets under management and $243.7 billion in client assets under administration. For more information, visit

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