Should Millionaires Trust Their Advisers Again? |
| Should Millionaires Trust Their Advisers Again? Posted: 24 May 2011 09:03 AM PDT Wealthy investors lost faith in the entire business of professional investment-management during the global financial crisis.
After diversifying and pouring money into hedge funds and private equity and doing everything else they were supposed to, the rich still wound up losing a fortune. Their trust in their advisers plunged, and the wealthy became the do-it-yourselfers of the financial markets. One 2008 survey showed that 81 of millionaires planned to pull money away from their advisers. How quickly they forget. With markets up and greed replacing fear, the wealthy once again are leaving their financial futures in the hands of wealth managers, according to a survey. Spectrem Group's survey of millionaires, or those with investible assets of $1 million or more, shows that 47% want to be "actively involved in the day-to-day management of their investments." That is way down from 2009, when 69% said they wanted to be involved. Those with $5 million to $25 million follow a similar pattern. The survey showed that 50% want to be directly involved, compared with 67% in 2009. Strangely, millionaires say they don't enjoy investing as much as they did in 2009 (did anyone enjoy investing in 2009?). Only 45% said they enjoyed it in 2011, compared with 64% in 2009. “Millionaires' desire to roll up their sleeves and get involved with their own investments has declined substantially since 2009, following a period of intense vigilance and participation during the financial crisis,” said George H. Walper Jr., president of Spectrem Group. “Wealthy Americans may simply be experiencing investor fatigue, prompting them to pull back and allow their advisers to take the lead in managing their assets.” Of course, any survey should be taken with a large grain of salt–especially when it aligns with the interests of wealth-management firms. But the decline suggests one of two things: either the wealthy have forgotten the lessons of the crisis (with advisers dumping products on their clients, failing to explain the risks, etc.); or they realize that as bad as their advisers were, the rich themselves are even worse at investing their money. Which do you think?
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