What HNWs Want

While most high-net-worth (HNW) individuals are satisfied with their primary advisers, 13% plan to shop around for a new one, according to a study by Phoenix.

Furthermore, another 15% are unsure if they will look for a new primary adviser. A primary adviser is used broadly in the Phoenix study—meaning it could be an accountant, lawyer, financial planner, etc.

Phoenix, a provider of insurance in the high-net-worth market, tracks the behavior of high-net-worth consumers annually, surveying workers and retirees with $1 million or more in assets (excluding primary residence). This year the reasons for looking for a new adviser were similar. One notable difference is the rise in the number of respondents that said they are looking for a new adviser because their current adviser doesn’t offer the products or services they need (31%, up from 16% in 2008).

Also, respondents cited more reasons in general (they could choose more than one). Overall, high-net-worth consumers are “expressing a lot more reasons to be looking for a new adviser,” said Walter Zultowski, senior vice president of Research and Concept Development at Phoenix.

Adviser Opportunity

One area where Zultowski sees advisers playing more of a role is longevity planning, which is the specific aspect of financial planning that assures that someone does not run out of money later in their retirement (such as in their 80s or 90s). Speaking at a Phoenix-sponsored event in New York City, Zultowski said advisers are increasingly telling clients, “You can’t plan just to live to your median longevity.”

He suggested that longevity could even branch out as another role in financial planning, like retirement planning has. Nearly 30% of respondents have already spoken to an adviser about longevity planning, and 34% haven’t yet but plan to. “You will see a population that is increasingly going to talk to an adviser about this,” he said.

Another area “ripe for examination” is estate planning, Zultowski said. More than a third (38%) of respondents does not have an estate plan. Of those that do not, more than a fourth say they’d specifically delayed it because of the continuing debate in Congress regarding the future of the estate tax. For advisers, there could be opportunity in that area.

Zultowski suggested that advisers move beyond investment and asset allocation to provide a more holistic advisory proposition. “They’re looking for more than just investment planning,” he said. More than half (61%) of survey respondents do not have formal financial plan. “This might be a time to engage people in a wider financial approach,’ Zultowski said.

Investing Concerns

The survey found that HNW consumers are showing a drop in financial confidence (see “HNWs Less Optimistic about Future). The results suggest they might lack some confidence in investing as well. Half of HNW consumers said they “agree” or “agree strongly” with the statement: “Lately, I’ve become confused about the best way to invest my money.” That is a sharp increased from 32% in 2008 (and the highest it’s been in the 10 years of the survey).

As far as their investing priorities, preservation takes priority above returns (59% and 41%, respectively). Unsurprisingly, noted Zultowski, older respondents are more concerned with preservation, and younger respondents are more concerned with return.

As far as investment products go, exchange-traded funds (ETFs) saw an increase in ownership, with 20% of respondents owning them (compared to 14% in 2008). While mutual fund ownership outside a qualified plan stayed fairly steady (only a 1 percentage point increase to 62% in 2009), bonds saw an increase in ownership (from 47% in 2008 to 52% in 2009). Notably, there was an increase in respondents planning a future purchase of both stocks and bonds.

Phoenix also found an interest in obtaining a guarantee on their investments; 36% are interested or “very interested,” and 31% are “somewhat interested.”

The survey, conducted by Harris Interactive, polled 1,735 households between January 30 and February 20.