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Millionaires are increasingly dissatisfied with their wealth managers and accountants, but they prize their personal trainers and therapists, according to a new survey.
Only a third of millionaires use a wealth advisor for their financial planning and 1 in 5 plan to fire their advisor due to high costs and poor service, according to a new survey from Long Angle, the professional network for startup founders and CEOs. Among those who do use an advisor, 26% are considering switching and 18% may stop using an advisor altogether.
By contrast, millionaires are highly satisfied with their personal trainers, therapists and other professionals who help with their overall wellness and family care, rather than financial issues.
“Improving your balance sheet or bank account doesn’t deliver the same emotional value as improving your health and family life,” said Chris Bendtsen, market intelligence lead at Long Angle. “Services for personal well-being or your children score the highest.”
The results highlight the growing importance of so-called “soft services” for the wealthy, as wealth managers, private banks and other firms look to attract and retain more high-net-worth clients. Once considered superficial next to financial advice and tax planning, services for health and wellness, family and kids, and travel and self-improvement are becoming core competencies in the business of advising and helping wealthy families.
For the study, Long Angle surveyed 114 people worth at least $2 million, with a majority having net worths of between $5 million and $25 million. It asked them to rank their satisfaction levels on 14 of the most common professional services used by the wealthy, from investment advice and estate planning to sports coaching and housekeeping.
Personal services, child care and education ranked at the top for satisfaction. Out of a score of 1 to 10, millionaires surveyed gave their personal trainers an average score of 9.3, the highest satisfaction for any category of service. They were also happy with their investment-visa advisors (8.8), followed by their personal sports coach and therapist. They also placed high values on services for their kids, including private school (8.3) and day care (8.2).
Financial, home and property services ranked at the bottom. The results for wealth management are especially notable. The satisfaction levels for wealth advisors was 7.2, with most of the respondents saying they don’t even use an advisor. The use of financial managers increases with wealth. Among those with $5 million or less in wealth, only 22% use an advisor, compared with 44% for those with $25 million or more.
Their chief complaint is cost. The median spending for financial advisors is $10,000 a year, according to the survey. A majority of respondents pay a fee based on a percentage of assets under management. A third of respondents pay a flat annual fee.
Many clients increasingly see asset-based fees as inherently lopsided, since the manager gets paid more simply as a function of asset size rather than performance or service quality. The frustration over costs is one reason more advisors are moving to flat fees.
“Flat fee structures reflect a growing client preference for transparent pricing and reduced conflicts of interest,” the report said.
Beyond cost, wealthy investors are also frustrated with service.
“The general feedback is that advisors are often slow to respond and the advice is not personalized,” Bendtsen said.
Accountants and tax lawyers didn’t fare much better. While 82% of respondents use a CPA or tax professional for their taxes, 42% are considering switching tax advisors. Their main complaints were that CPAs were slow to respond and weren’t proactive or strategic enough.
On estate planning, half of millionaires surveyed don’t use an estate lawyer, although their use is highly dependent on wealth levels. Among those with $25 million or more, 69% use an estate lawyer. When it comes to satisfaction levels, estate attorneys ranked below pool services.
The poor grades for financial and legal providers, and high marks for more personal services, go beyond the predictable emotional benefits of feeling and looking better every day. Athletic trainers, sports coaches, teachers and even housecleaners seem to be better at providing the kind of highly customized, goals-driven help that the wealthy are looking for, rather than cookie-cutter solutions commonly provided by wealth managers and lawyers.
“What we heard is that the wealth managers, estate lawyers and CPAs feel more transactional,” Bendtsen said. “They don’t feel personalized.”
Services for children also get high marks and a high share of the wealthy’s spending. The respondents spend an average of $53,558 a year on their nanny, $30,000 a year on private school and $20,000 a year on day care. Private school and day care both scored above an eight on satisfaction despite the price.
Therapy is becoming increasingly important to the wealthy, especially the younger rich. Millionaires gave their therapists an average high score of 8.3. Their median spending on therapy is $5,000 a year.
Nearly half (43%) of millionaires under the age of 40 use a therapist, compared to only 13% for millionaires over 50. Among those who use a therapist, the main benefits cited were quality of care and impact, as well as kindness and having a personal connection.
“I think people under 40 are more proactive about their mental health and emotional well being,” Bendtsen said.
