Wealthy Investors Pick the First Advisor They Meet

But that doesn’t mean they’ll stay with them indefinitely, according to Dynasty Financial Partners.

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When trying to land a potential client, making actual contact with the potential investor may be just as important as any other skill that advisors can offer.

That’s because the majority (57 percent) of high-net-worth investors choose the first advisor with whom they speak, according to a survey by Dynasty Financial Partners. The firm surveyed 1,000 respondents, all of whom currently work with a financial advisor and have a minimum of $500,000 in investable assets.

“It’s an extraordinary finding that high-net-worth families are selecting the first and only advisor they speak with. It’s like buying the very first house you look at,” Dynasty CEO Shirl Penney said in a statement.

Advisors deploy many strategies to get in front of potential high-net-worth clients, including word of mouth, e-mail, and social media marketing. Dynasty found that when seeking a new advisor, 46 percent of respondents were referred by a friend, family member, or colleague. Another 23 percent were referred by professionals, such as an accountant or a lawyer, while 23 percent used social media, blogs, or other online sources.

Investors under the age of 45 were less likely to rely on referrals and instead used multiple sources to identify potential advisors. Younger respondents were about three times more likely to find a new advisor using online sources than they were through a referral.

“Sadly, data show that relying on your friends and family for referrals may not be the wisest strategy for these wealthy investors, as everyone’s circumstances and needs are unique,” Penney said.

In recent years, many companies have debuted new technologies designed to turn prospects into clients. However, to become a prospect, advisors need to know why investors are seeking help. According to the survey, Dynasty found that life events — such as a change in employment or an inheritance — were often the trigger for seeking financial advice, with 35 percent of total respondents and 54 percent of 35-to 44-year-olds specifying a life event.

However, just because an investor chooses the first advisor with whom they speak doesn’t mean they’ll stay with them indefinitely, particularly if their values or expectations don’t align. According to the survey, 61 percent of respondents under the age of 45 who had changed advisors in the past did so because of a mismatch in the relationship.

“If high-net-worth investors don’t feel they are in a trustworthy, high-value relationship with their advisor, they end up switching,” Dynasty wrote.

Sixty-one percent said they had switched advisors because they were looking for a different or specific expertise. Twenty-four percent of investors switched advisors because of investment performance, 18 percent because they didn’t feel valued as a client, and 30 percent because their advisor retired.

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