Trust, money and a shake-up for investment advisors

by
The exodus has begun.

Wall Street Journal’s Wealth Report blog reported on a study that concluded

81 percent of investors with $1 million or more in investible assets plan to take money away from their current advisor. An even larger number — 86% — plans to tell other investors to avoid their advisor.

This was a long time coming, and it has as much to do with trust as it does with market performance. Having worked regularly with investment advisors and wealth managers over the past several years, I’ve watched the field get more and more crowded as the number of families with new wealth has skyrocketed. Many of these firms are rooted only in a concept, with little to inspire faith in their investment abilities.

This report spells a difficult time for both firms with direct investment offerings and wisdom and those who have accepted the trust of clients but delivered nothing of their own in return. We could be seeing the beginning of a new shape to the advisory industry that calls for a complete re-assessment of the trust factor…for example, firms that conduct research in-house and take a hands-on approach to managing money should proactively set themselves apart by highlighting their expertise, track record and personality.

Note: a moment of self-indulgence, as the above report and my perspective comes right on the heels of this brief letter published in Investment Advisor, Get Smart, which emphasizes the value of thought leadership for advisory firms.Am I sharp or what?

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