A new report by Chicago-based investment research firm, Spectrem Group, says wealthy clients are showing declining loyalty to financial service providers and seeking out advisors based on individual reputation.

“Driven in part by internet-enabled information and transaction tools, high net-worth investors are moving away from traditional loyalties to financial institutions and aligning themselves with advisors and open architecture platforms on which they manage their finances,” states the report entitled, Is Client Loyalty Dead? Meeting the Needs of Affluent Investors in the Age of Aggregation.

According to Laurie Cochran, a director at Spectrem and co-author of the report, there are three key trends driving this change, including the impact of the internet, the movement toward open architecture, and the increased role of independent advisors. “Today, over one-third of affluent investors consider an independent advisor to be their primary financial advisor, equaling the number of affluent who use a full service broker in this capacity. When choosing an advisor, affluent households first look at the name and
reputation of the advisor, rather than the name of the company the advisor works for.”

Cochran also notes that an open architecture platform is critical, “because most advisors prefer access to a wide array of products and services from multiple providers, enabling them to maintain objectivity and select the best-in-class product or service for the client.”

The same is true for investors, says Cochran, adding that affluent investors are demanding access to a variety of investment products and services from many sources. “We believe that investors are comfortable receiving all their financial information from one source, but they do not want all of their investments to be in the products of one company,” she said. “With the emergence of open platforms like online brokerage accounts, SchwabÕs One Source and new account aggregation services, investors now have the ability to satisfy those goals,” she said.

Technology has helped open the product shelf. “The internet has provided investors with access to a vast array of previously unavailable financial information, increasing their knowledge and boosting their investing confidence. It has also changed the way many affluent households manage their finances, providing 24/7 information and transaction capabilities.”