Friends and family are the most often used resource when an investor is trying to find an investor, a Spectrem study shows.
The study from 2012 determined that 46 percent of Millionaires turn to friends and family to get a referral for a new investment advisor. There are a lot of other ways that a person can find an advisor, but 10 percent of the study group said that their new advisor made first contact.
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The study investigated the trends of investors with between $1 million and $5 million in net worth not including primary residence.
The Securities and Exchange Commission offers advice on what you need to know before you choose an advisor, but to find an advisor, its best to know someone who already has one in mind. Besides advisors making first contact, the other most frequently selected option as attending a seminar or special event in order to find an advisor.
Once an investor has a few names to consider, their next step is usually to ask questions. The SEC suggests an investor find out how an advisor is paid, the services offered, the products offered, and whether the advisor is licensed, registered or certified with either the state, the SEC or the Federal Industry Regulatory Authority.
But some investors are trying to find an advisor because they have left their previous advisor. The No. 1 reason for investors to leave their advisors is lack of proper, timely and frequent contact.
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By GlobalDataThe survey said that 58 percent of Millionaires would change their advisor because he or she did not return phone calls in a timely manner. Forty-nine percent chose "not being proactive in contacting me" as a reason, and 44 percent said "not returning emails in a timely manner."
The other reason that got more than 50 percent selection from the study group was "not providing me with good ideas and advice”.
Here’s good news: sixteen percent of Millionaires in the study said they could not think of a reason for firing their financial advisor. Only 4 percent said they were likely to replace their current advisor in the next 12 months, although 17 percent of investors 44 and younger said they were likely to do so.
There were segments of the Millionaire study group looking to add a financial advisor (15 percent of those 44 years of age and younger, and 11 percent of those between the ages of 45 and 54). Fifty-eight percent of investors said they were likely to recommend their own advisor to someone they know.
