Canadian millionaires are not fully satisfied with the advice and services offered by the financial services industry according to a research report from Toronto-based Taddingstone Consulting Group.

The report tracks the profiles, attitudes and behaviors of Canadian millionaires and their financial advisors. “Close to 25,000 millionaires are on the lookout for a new financial advisor every year” said Keith Sjogren, leader of Taddingstone’s Wealth Management practice, in a news release. “They avoid consolidation and spread their wealth across multiple providers. Millionaires are not yet content.”

Taddingstone’s report noted a sharp increase in market share of the alternative banks such as ING Direct and PC Financial. “The millionaires appreciate the focus on efficiency and attractive pricing. These institutions never targeted the wealthy investor but their offer has great appeal and the millionaires went after them. A complete reversal of the traditional role as the hunted have become the hunters” said Sjogren.

The research also found that while full-service brokers remain the dominant investment advisor to the millionaire segment, only 55% of their clients said they were satisfied with their broker. As well, just over 40% of the millionaires profiled told Taddingstone that they now trust their own financial skills more than those of the professionals who have traditionally filled the role of primary financial advisor.

What’s the reason behind the dissatisfaction with brokers? “The markets were difficult. Performance suffered but fee structures remained constant,” offers Sjogren. “Net worth and appetite for investment risk decreased and, ultimately, the needs and expectations of the affluent investor shifted.”

Taddingstone noted some trends in product preferences including a rise in interest in alternative investments such as hedge funds, real estate and private equity. Hedge funds, in particular, are becoming a mainstream holding of affluent investors, particularly for higher risk-taking sub-segments such as entrepreneurs.

Further discussions with Canada’s millionaires revealed that as many millionaires own investment property as own government bonds. “Financial advisors would be wise to have access to investment property specialists to ensure that they can offer expertise in other important asset categories,” said Sjogren.

The study also polled opinions about Canadian financial institutions’ efforts to offer clients a consolidated platform of services and advice. Are Canada’s millionaires ready to consolidate all their financial assets with one institution or advisor? “Yes and no.” said Sjogren. “The Millionaire segment indicates a tentative willingness to consolidate but, so far, only 27% have taken that step. One third are concerned about limited objectivity and the focus on proprietary product. They want one aggregated statement of their holdings, fewer advisors to talk to and an overall fee that reflects the value of their entire business with that institution.” The report indicates that the banks, brokerage and planning firms, counselors and insurance companies are aware of what might prompt consolidation but, to many Millionaires, most have yet to offer an attractive solution.

Taddingstone is a boutique strategy consulting firm focused exclusively on the financial services industry in Canada and the United States.
http://www.newswire.ca/en/releases/archive/June2004/01/c9929.html