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Millionaire Investors Go Solo: Financial Advisors Receive a ``C'' Grade for Competence and Confidence.

Business Editors

GREENWICH, Conn.--(BUSINESS WIRE)--Oct. 30, 2002

NFO WorldGroup Survey Discovers Nearly A Quarter of Affluent

Investors Closing Their Books on Financial Advisors, a Five

Percent Increase Over 2001; Full-Service Brokers Get a "D" Grade

"No advice is the best advice," is the message that nearly a quarter of America's wealthiest investors are telling the brokerage and banking community, says a new study from NFO WorldGroup, one of the world's leading providers of research-based marketing information and counsel. According to the 2002 NFO Affluent Market Research Program(SM), twenty-one percent of these millionaire investors decided they are better off without a financial advisor this year. Overall, America's affluent investors have given their advisors a "C" grade for mediocre performance, ability to resolve problems, and a general lack of competence in taking a leadership role in protecting and building their clients' portfolios.

"A `C' grade didn't get financial advisors into their MBA programs, and it surely will not win the trust of the wealthiest investor," observed David Thompson, Director of Affluent Market Research at NFO Financial Services, a division of NFO WorldGroup. "In this economy, affluent investors are demanding excellence, not mediocrity, and they simply aren't getting it from the mainstream of the advisor community."

"Full-service brokers -- who are traditionally the mainstay of financial advice for affluent investors -- are particularly at risk of losing their most prized clients," continued Thompson. "The data suggests that very few full-service brokers have been able to differentiate themselves with creative and effective wealth preservation strategies, or deliver the personalization and incremental value that wealthy investors require. As a result, affluent Americans are looking to boutique financial specialists who may offer a narrower range of services, but instill a greater feeling of competence and confidence, or they are simply going it alone."

The "C" grade for financial advisors was determined through NFO's powerful and industry-leading NFO TRI*M(SM) customer relationship management program, which has been applied in more than 1,700 studies and 3,000,000 interviews with consumers and business respondents around the world. For this study, 1,500 affluent households gave their financial advisors an overall performance score of 75-79, equivalent to a mediocre "C" grade.

The study also shows that while full-service brokers are still the leading source of financial advice for affluent investors, their penetration rate has decreased significantly over the past two years, and they now rank the worst among various advisors with a score of 67, equivalent to a "D" grade. On the upside, 23% of millionaire households -- versus 14% in 2000 -- have moved to specialized Certified Financial Planners, particularly fee-based advisors, who ranked higher than full service brokers with an average score of 86, equivalent to a "B" grade.

Client retention is key in today's market, where providers and advisors have lost a lot of credibility and confidence. However, demonstrating competence and excellence to retain affluent customers is not only a function of investment performance. The NFO study reveals that today's affluent investor is demanding a combination of six critical capabilities as the winning formula for retaining their loyalty and trust:
-- Investment Performance

-- Quality of service

-- Quality of advice

-- Knowledge of representatives and advisors

-- Ability to resolve problems

-- Representatives who know their client's specific situation

According to the NFO TRI*M results, affluent customers gave "Excellent" or "Good" ratings for the quality of service and knowledge of advisors, but only gave "Average" ratings for the quality of advice and ability to resolve problems.

"What we have here is a crisis of competence," explained Shubhra Ramchandani, North American Stakeholder Management Practice Leader, NFO WorldGroup and leader of the NFO TRI*M analysis. "These NFO TRI*M ratings are a clear sign that advisors need to re-evaluate their client retention plan, brush up on their performance and create personalized solutions for their affluent clients or risk heavy client asset drain. It goes to show that there is much room for improvement among providers and advisors, and more importantly, there is a need for leadership if they want to improve their ratings for customer satisfaction and loyalty."

The study also reveals that a key to deepening relationships and improving loyalty among affluent households is increasing the share of a household's assets under a particular advisor's management. The NFO TRI*M analysis also indicates that providers can enhance affluent customer retention if they combine basic services, such as brokerage, basic advice and online services with planning-based services such as private banking, tax, retirement and education. This will increase the average score from 67 ("D" grade) to 90 ("A" grade).

"In the early bear market from 2000-2001, millionaires did not experience a great decline in wealth, but when the market kept marching downward in the past year, these households took a hit. Somewhere along the way, advisors fell down on the job," Thompson concluded. "Advisors are highly rated for their knowledge of wealth management, but over the year they failed to take a leadership role with their clients to help them through the down time, creating a disconnect in the value proposition. This points to a major lost opportunity to better serve their clients."


NFO TRI*M is the ultimate research platform for gaining deeper insight into customer satisfaction and other important stakeholder relationships. NFO TRI*M has been proven in hundreds of engagements around the globe. A breakthrough in relationship measurement and management, NFO TRI*M enables executives and researchers to understand customer complexities, prevent customer "leakage" and secure a high level return from company customer satisfaction programs. NFO TRI*M may be applied to a full range of stakeholders, including customers, trade partners, employees, and shareholders.

About the Affluent Market Research Program(SM)

The Affluent Market Research Program(SM) (AMRP) offered exclusively by NFO Financial Services, part of NFO WorldGroup, is the "gold standard" syndicated study of the U.S. wealth markets. AMRP is based on a representative national sample of approximately 1500 households with a net worth of $500,000 or more, excluding principal residence. The mail-based study includes an over-sample of households with investable assets of $1 million or more. To learn more about AMRP or other NFO Financial Services research products and services, please contact David M. Thompson at 860/651-8400,

About NFO Financial Services

NFO Financial Services provides decision-related information and insights to wealth management companies, banks, insurers, brokerage firms, on-line financial services institutions and others. It offers specialized experience from all of these institutions to address marketing-related issues and provide research solutions to understand them.

About NFO WorldGroup

NFO WorldGroup is one of the world's leading providers of research-based marketing information and counsel. "Marketing minds specializing in research(TM)," NFO has facilitated Fortune 500 clients' business decisions for more than 50 years by providing in-depth knowledge and understanding of consumers and brands through research. Their services include comprehensive counsel on market evaluation, product development, brand management, customer satisfaction, pricing, distribution and advertising effectiveness. NFO is a worldwide leader in Internet-based research and maintains one of the world's largest Interactive panel communities. They are one of The Interpublic Group of Companies (NYSE:IPG), and have majority-owned operations in 40 countries. Visit NFO WorldGroup on the Web (
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Publication:Business Wire
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Date:Oct 30, 2002
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