Wealthy households show independent advisers the money

BOSTON — Independent advisers are used by 22% of millionaire households, and those advisers on average hold 56% of the millionaires’ investible assets — the largest share among financial service providers, according to a survey released last Monday by Fidelity Investments. The No. 1 reason cited for using independent advisers was that they put clients’ interests before those of a firm, according to the Fidelity Millionaire Outlook, a new analytical indicator developed by Fidelity, the biggest U.S. mutual fund company. Those respondents also said they chose independent advisers for the objectivity and because they did not push any particular firm’s products, the survey showed. “This confirms and validates what we know from our clients,” said Emily Chien, a senior vice president at Fidelity Registered Investment Advisor Group. “Millionaires have developed trusted relationships with their independent financial advisers, and independent financial advisers have put their clients’ interests first.” Millionaire Outlook, a national measure of millionaires’ confidence in the state of the U.S. economy, is based on a survey of more than 2,500 financial decision makers at households with at least $1 million in investible assets, excluding real estate and workplace retirement accounts. Fidelity expects to report its Millionaire Outlook findings annually. Respondents’ average age was 59, and 48% were retired. The households had average pretax annual income of $366,000 and average investible assets of $4.01 million. Average real estate investments — including the primary residence — were $1.9 million. Average household workplace retirement assets totaled $1.3 million, and average household debt, including mortgages, was $284,000. The online survey was conducted at the end of last year for Boston-based Fidelity by Burke Inc., an independent-research firm in Cincinnati. Seventy percent of millionaire households used some sort of financial adviser, and the average length of that relationship spanned 10 years, the survey found. The average age at which a wealthy investor first established a relationship with a financial adviser was 43. Decamillionaires — those with investible assets of $10 million or more — established their first relationship with a financial adviser at age 39, on average, the survey showed. Decamillionaires also were the most likely to worry about whether they would have enough money to leave an inheritance to their children. Compared with millionaires with less than $10 million, decamillionaires tended to be younger and accustomed to having more assets. As a result, they tended to worry more about being able to stretch a more expensive lifestyle over a longer time period. When asked what the main reason was for hiring their first adviser, 22% of millionaires cited receiving a trusted recommendation, 17% answered reaching a certain wealth level, and 17% said beginning to plan for retirement. In general, asset size wasn’t a predictor of adviser use, though a higher proportion of decamillionaires — 82% — reported having a relationship with an adviser, versus 70% for those with assets under $10 million. Use of multiple advisers was common. Among those with an adviser, 34% reported having two or more. Of the 22% that had a relationship with an independent adviser, 71% said they used advisers who offered comprehensive wealth management. The remaining 29% used advisers who focused on money management. Still, nearly a third of millionaires had no paid financial adviser, although 13% of that group said they were likely to start using one in the next 12 months. Of those, more than a quarter said they were likely to use an independent adviser. Using a financial adviser is a prudent idea, according to Bruce R. Bent, chairman of The Reserve, a New York-based money management firm with $54 billion under management, and the inventor of the world’s first money market fund. “You get to the point where, do you do your own brain surgery? And the answer is no, you don’t,” he said.