Mass Affluent Investors Make More Fickle Clients As They Chase Performance

Sunday, March 27, 2011 23:22
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Mass Affluent Investors Make More Fickle Clients As They Chase Performance

Tags: investor behavior | prospecting

Turns out that while many advisors are afraid of their ultra-wealthy clientele leaving for a competitor, it's actually the middle-market investors who have no loyalty.

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In the latest survey from Northstar Research Partners and communications firm Sullivan, a full 36% of the investor population say they'd be open to switching advisors, with most of them -- 25% of the total polling base -- saying the promise of bigger returns would be enough to get them to switch.

 

According to initial reports from people who've seen the report, mass affluent investors are especially prone to jumping ship in order to chase better performance elsewhere.

 

The good news is that 25% of the "self-directed" investor class is now in the market for an advisor -- a far cry from two years ago -- and that, in theory, the very fickleness of mid-range clients means there will continue to be a fair amount of prospect churn out there.

 

Naturally, once a client leaves one advisor just because the raw numbers look greener on the other side of the street, there's nothing to guarantee that he or she won't go elsewhere once someone with a superficially higher-rolling strategy pops up on the radar. 

 

But once an advisor gets one of these theoretically fickle clients, education could help keep him or her from straying. The perils of chasing trailing returns and the improbability of beating the broad market over the long term are a good place to start.

 

And if not, it's sad but true: easy come, easy go.

 

 

 

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