‘The Most Formidable Brand’ in Wealth Management

Half of all affluent investors can name this company. Can an independent RIA hope to compete?

(Illustration by RIA Intel)

(Illustration by RIA Intel)

It has never been easier to become an RIA. But starting and growing a successful one is a feat, especially considering the headwinds highlighted in a recent report.

For wealth management firms, recognizability matters. Investors usually look for a new financial advisor after a major life event; frequently after a change in employment status, the death of a loved one or a perceived critical failure by their wealth manager. At least the former happens all the time.

Some services, like Zoe Financial, exist to help investors looking for a new one. But there is no truly objective, comprehensive, and authoritative guide for investors to analyze hundreds of private wealth managers, according to a recent report by Cerulli Associates, a Boston-based research and consulting firm.

So, investors typically seek recommendations from friends and family or explore wealth managers they can already name.

A few companies come to mind far more often than others. Investors who were asked without any prompting, “When you think of wealth management or investment companies, which ones come to mind?” half of all survey respondents typed in Fidelity Investments.

Some of the largest, long-standing financial services firms failed to spark their memory. Even worse, many investors might have never heard of them at all. A third of respondents listed Charles Schwab and 23% wrote down Vanguard. Only 15% wrote down Bank of America’s Merrill Lynch and or Edward Jones. There were no independent RIAs in the top 12, the report showed.

Investors were then asked to select from a list of wealth managers ones they were familiar with. Fidelity was again the most-recognized; 88% of investors selected the company (tied with Merrill Lynch).

“The firm’s extensive advertising, combined with its presence as a retirement plan provider for millions of participants, make [Fidelity] the most formidable brand in the wealth management segment,” Scott Smith, director of advice relationships at Cerulli, wrote in the report.

The survey also showed that Fidelity is one of the most trusted brands, with 71% indicating so. Vanguard was the second most-trusted, with 66%, followed by Charles Schwab with 62%. The only outlier in survey results focused on perceived trustworthiness was Wells Fargo, which 31% of investors “strongly disagreed” with a statement that they trusted the brand. The bank has worked to improve its image after a fake-account scandal in 2016 soured consumers on the brand.

Among the top 12 companies most recognized by unprompted investors, Ameriprise ranked last with 5%. But Cerulli notes that reduced visibility doesn’t necessarily translate into fewer opportunities.

“Given investors’ elevated interest in customized advice and Ameriprise’s high concentration of CFP designation holders, customized advice is likely a key to the firm’s long-term success. In an era dominated by providers focused on creating digital engagement, this strategy allows Ameriprise to pursue the road less traveled, which could, in time, make all the difference,” according to the report.

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