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Appetite for financial advice on the rise among affluent, says Schwab study


Seven in 10 affluent investors feel today’s financial markets are too complicated to navigate without an advisor, according to a study by Charles Schwab.

One-third of study participants also say their desire for investment advice has increased in the past year, and three-quarters say they are most confident making investment decisions when they collaborate with their investment professional. Just one-third say they feel that same level of confidence when making investment decisions by themselves.
Advice and the Affluent Investor: A Study of Attitudes and Behavior by Charles Schwab (AAIS) surveyed more than 1,000 affluent Americans who receive some form of professional financial advice. Seventy per cent of those surveyed work with a single advisor, and while on average their advisor handles 43 per cent of their assets, nine in 10 want to work with an advisor who looks at their entire financial picture.
Trust and transparency are cornerstones of these relationships. Those surveyed trust individuals in the financial services industry (72 per cent) more than financial services companies (42 per cent), and 10 per cent trust no one; an overwhelming majority want transparency around how their advisor is compensated for the advice they are providing (85 per cent).
“Regardless of how much and how deep the advice, today’s affluent investors have one thing in common: they want a trusted expert on their side looking at the big picture on their behalf,” says Bernie Clark, executive vice president and head of Schwab Advisor Services.
As of 31 May, Schwab’s suite of advice offerings for retail investors has grown to USD139bn assets under management from USD114bn the prior year. Additionally, as of 31 March, Schwab custodied USD895bn in client assets for more than 7,000 independent registered investment advisors (RIAs).
The study found that very few (11 per cent) affluent investors see themselves as advanced investors; most label themselves as an intermediate (68 per cent) and one in five (21 per cent) describe themselves having beginner skills. Fully half of respondents see investing as a chore, and not an activity they particularly love or hate. Despite these tepid feelings, four in ten (41 per cent) say they are much more involved in their investments in 2013 than they were in 2012.
“These investors may lack the experience and appetite to fully tackle the task-at-hand, but they absolutely understand that investing is a job that needs to be done and they do not want to go it alone,” says Clark, adding that half of those studied use the word “comfortable” to describe how their investment professional makes them feel about their financial future.

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