Four Things The Very Wealthy Share With All Investors Hot

1. The very wealthy do not use Assets Under Management (AUM) as a criteria for selecting a financial advisor. The reality is that the vast majority of retail investors have no idea what AUM is, and don’t perceive it as something that makes one advisor more qualified over another. What is surprising is that the FOX directory perceives that the very wealthy don’t care about AUM either. Many rankings focus on AUM, so is this a classic disconnect between investor and advisor? I think so.
2. The very wealthy also have no idea how to find quality advisors, aside from finding AUM based rankings, which as discussed are not useful to them. One would think that those with yachts and private jets would have more sophisticated resources by this time.  Many of us visualize these $20m+ in investable asset clients networking in small circles where advisors abound. Per FOX, evidently not.
3. Another common problem is that the very wealthy cannot tell the difference between various types of wealth advisors. The article actually opines that comparing refrigerators is easier than comparing advisors. I was very surprised by this comment, although in retrospect, I have met many very wealthy individuals and, in fact, their knowledge of the advisor landscape is cursory at best. FOX focuses on this market, so their finding is interesting for sure.
4. Education of the investor is highly important, both for the investor and wealth advisor. I always assumed that families with significant wealth were fairly educated on the vagaries of how to preserve the family fortune and legacy for generations to come. It is fascinating that educating this niche of investors is considered a high priority – one would have thought they’re already well-versed on this critical topic. Again, not.

When I was asked for a quote for this article, I really expected that my own company’s product, www.AdviceIQ.com would simply be used as a peer of “databases” that help investors understand and find advisors. What I did not expect was to learn that these very wealthy investors shared the exact same problems that all other investors share. Many takeaways, but the most important one I think is that if the uber-rich don’t understand advisors, then most clients and prospects really need some basic education about financial advisors.