The report by IPI has revealed that only 32% of the families under the US$50 million asset threshold were comfortable giving their advisors full discretion to make portfolio changes as the advisors saw fit.
Only 20% of the families, whose assets exceed US$200 million, were found to give their managers full discretion; with 44% allowing limited discretion; and 36% said that they must approve all decisions.
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Mindy Rosenthal, IPI executive director, said: "Post the financial crisis, investors have realized they cannot abdicate the ultimate responsibility for overseeing their wealth. We are seeing a clear trend toward investors taking an active role in partnership with the advisor."
The IPI survey has revealed that 36% of families who rely on an in-house chief investment officer (CIO), gave full discretion, compared to just 10% of the families who outsource the CIO function giving their managers full discretion. The remaining 90% retain input on the decision-making process, with 35% having nondiscretionary managers; and 61% of families reported hiring an outside CIO.
Meanwhile, both the investors and advisors were found to be concerned about conflicts of interest, with 37% of the investors opining to see improvements in the business models of firms regarding conflicts of interest and the remaining 63% seeing no progress or continuing to see problems inherent in the system.
Only 38% of the advisors expressed confidence about their own firms’ business models containing less conflict of interest and more reasonable and transparent fees than they did five years ago.
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By GlobalDataMoreover, the investors were also found to be lacking in confidence in their investment strategy. Only 28% of families said they were confident their current investment strategy, 49% were neutral, and 23% expressed major concern.
