High-net-worth clients may prove easy to get and just as easy to lose, study reveals

investmentnews.com:

Being highly visible to high-net-worth (HNW) individuals may be all you need to do to secure them as a client according to new research.

It found that these wealthy people may seek help with their finances following a major life event, but their due diligence may be minimal with 57% deciding to work with the first advisor they speak to.

The survey of those who work with an advisor and have at least $500K in investable assets by Dynasty Connect Financial Partners also discovered that the decision to contact an advisor is likely to have been triggered by an inheritance, change in employment situation, or other major event.

Dynasty’s CEO, Shirl Penney, said that important events such as these should demand robust due diligence.

“It’s an extraordinary finding that high-net worth families are selecting the first and only advisor they speak with. It’s like buying the very first house you look at,” he said. “Investors need to ensure their chosen advisor has the right experience to handle the often-complex nature of these life events for families of significant wealth.”

Referrals remain an important source of new clients with almost half of respondents stating they were referred by a friend, family member of colleague, 23% by a professional advisor such as an accountant or lawyer. Almost a quarter found an advisor on social media, a blog, or other online source.’

While the lack of consideration when choosing a financial advisor may be surprising, the ease at which NHW clients may decide to switch is too.

The survey found that if these clients feel that the relationship with their advisor was not trustworthy or high value, they are likely to switch to another. For those aged under 45, 61% said they had change in the past because