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The Spectrem study Preferred Sales Approach: Capturing the Wealthy Investor asked investors how they went about finding their first advisor, and what approach caused them to accept the services of the advisor they now work with.
The study starts at the beginning by asking investors what maneuvers they would use initially in their search for a new advisor. The top response was “research the firm the advisor works for”, with 57 percent of investors agreeing that would be part of their process. But that leaves 43 percent who choose a different path and do not concern themselves with the firm the advisor works for.
But 44 percent would turn to friends and family for advice on specific advisors or other matters related to the selection of a new advisor. It makes sense to discuss an issue as important as selecting a new advisor with someone you know who has gone through the process and has their own hits and misses to reflect on when considering the services of a financial advisor.
This consideration of friends and family helps explain the value of receiving recommendations from your current clients to people they know who are looking for a new advisor.
However, while a friend or family member might be a place investors start when looking for a new advisor, they are more likely to consider a different voice in the process. Forty-two percent of investors said the No. 1 referral source they give the greatest credence to in finding a new advisor would be their personal accountant. That was a much larger percentage than the 23 percent who said they would give the greatest attention to the referral from a family member, or the 18 percent who said the friend suggestion would be the most powerful.
Accountants are likely to have a good idea which advisors are both successful and easy to work with, since they often have business relationships with advisors in an attempt to balance a client’s investment desires with tax-related concerns. Also, a referral from an accountant that does not work out could come back to harm the relationship between the accountant and the investor, so the accountant is likely to make referrals with care and caution.
The Spectrem study segments investors on a number of demographic categories, and the occupational cuts are the most revealing. Educators (47 percent) and Senior Corporate Executives (46 percent) voiced the greatest support for the accountant referral, while investors in the field of Information Technology were more likely to consider the recommendation from a family member (30 percent) or friend (28 percent) over that of their accountant (25 percent). It is likely the Information Technology investors skew younger, and younger investors often do not have a strong or lengthy relationship with their accountant that would presume they would pay closer attention to a referral from that professional over friends or family members.