More Millionaires Using Independent Advisers

Independent advisers hold, on average, 71% of millionaires’ investable assets, compared to 56% the previous year — the largest share among any other financial provider. Nearly nine in 10 (89%) are satisfied to very satisfied with their independent adviser, according to a press release about the results of the survey about the investment attitudes and behaviors of millionaires.

More than one-third (37%) of millionaires still work with their first adviser, a relationship that began at age 39 and lasted nearly 10 years, on average. The top reasons why millionaires no longer work with their first adviser is because either the adviser retired or the client moved away, The Fidelity Millionaire Outlook survey found.

“Millionaires told us that, while they seek control and validation in their investments, they recognize the value of independent and objective investment advice,’ said John W. Callahan, president, Fidelity Institutional Wealth Services. “Independent advisers are well-positioned to service millionaires by offering the sophisticated wealth management capabilities they desire, and by establishing themselves as objective partners who can play the role of sounding board or decision maker, based on each client’s distinct needs.’

Negative Now, Optimistic Later

The research said millionaires currently have a negative view of the economy but see a significant improvement one year from now.

Using a scale where +100 represents the most favorable outlook, zero a neutral outlook and -100 the most negative outlook, that millionaires’ current view of the U.S. economy is “very weak’ (-50), down significantly from a “strong’ (+41) level of confidence a little more than one year ago, the research said. Millionaires’ confidence shifts significantly in the positive direction (+18) for early 2009.

“Just over a year ago, millionaires were cautious when predicting the state of U.S. economy by the end of 2007, something which happened to prove fairly accurate,’ said Callahan. “For this year’s Outlook, the reverse is true, although their future confidence is a bit tempered.’

“Millionaires’ attitudes and behaviors could be seen as a harbinger for economic stabilization or turnaround beginning in early 2009,’ Callahan added.

Poised for Opportunity

Despite current pessimism in all five key areas analyzed in the outlook — the stock market, value of real estate, business spending, consumer spending, and the overall economy — millionaires seem poised to take action with their investments, the survey found.

According to the survey, in the next 12 months, 27% of millionaires plan to increase their exposure to individual stocks, while only 7% plan to decrease it. Meanwhile, 31% plan to allocate additional assets to fixed-income vehicles and 14% will move more into real estate. Three-quarters (75%) of millionaires indicate that the subprime situation has had at least a slight negative impact on the performance of their investments in the past year, with 42% saying it had a moderate to large negative impact.

“What this shows is that while some investors might see a decline in the stock market or a drop in real estate values as cause to get out or sit on the sidelines, millionaires view it as a buying opportunity, and — given their liquid net worth — seem poised to take action,’ said Gail Graham, executive vice president, Fidelity Institutional Wealth Services.

Still Seeking Wealth

One in five (19%) millionaires do not feel wealthy, despite having average investable assets of $3 million and annual income of $270,000, the research. These millionaires report that they would consider themselves “wealthy’ when their investable assets reached $23 million, on average, the release said. Millionaires’ perception of their wealth is related to their confidence in the economy, as those who feel wealthy are less pessimistic about the current state of the economy (-47) and more optimistic about the future (+21) than those who do not feel wealthy, (-58) and (+8), respectively.

Additionally, 13% of millionaires who don’t feel wealthy say finding a financial adviser is a pressing concern to them, compared to just 5% of those feeling wealthy. The release said this indicates they may be looking for help in order to achieve a sense of wealth.

The national survey was conducted for Fidelity Institutional Wealth Services in January by independent research firm Burke, Inc. The survey received completed responses from 1,000 financial decision makers at households with at least $1 million in investable assets, excluding workplace retirement accounts and real estate. The data from it are representative of U.S. households with those assets, with a margin of error of plus or minus 3%.