Less satisfaction shows an under-served market

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By: Wise Marketer Staff |

Posted on July 17, 2002

Satisfaction with financial advisors has dropped by 16% among mass affluent investors (those with US$500,000 to US$1 million net worth, excluding primary residence), according to a report by Spectrem Group.

The report, Satisfaction in the Mass Affluent Market, says that this decline in satisfaction since 1999 is most likely due to the escalating needs of these investors combined with the financial industry's ongoing challenge to effectively serve this market.

Market performance
Mass affluent customers have typically awarded high satisfaction scores to the providers that have the largest percent of their assets. Within the past few years, however, these same customers registered a drop in satisfaction with their primary advisors, while wealthier investors reported an increase in satisfaction.

"Part of this decline could be attributed to poor market performance. However, we have found that performance is traditionally not a main driver of satisfaction among the affluent," says Spectrem director Laurie Cochran. "Investors are willing to overlook slight under-performance if they are satisfied with the quality of service. Performance usually comes under closer scrutiny if services are not being performed satisfactorily."

Client needs
The highly specialised staff and lavish personal attention required to effectively serve the wealthy are often very costly. In today's environment of rising costs and leaner margins, maintaining that level of service is increasingly difficult for financial service providers.

With the economics of serving investors being driven by assets 'under management', the mass affluent often do not have the assets to support the expensive services they seek. This leaves advisors with the difficult task of finding new ways to meet the needs of this market while still making a profit.

The report examines provider and advisor satisfaction among the 3.5 million households in the mass affluent market, and outlines the demographic profiles of individuals who use different types of institutions. It examines the differences between investors who use larger institutions versus independent advisors, and provides advice on how financial providers can strengthen their relationships with mass affluent investors.

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