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Billionaires are increasingly dissatisfied with money managers and accountants, but highly value personal trainers and therapists, a new survey has found.
Only one-third of high-net-worth individuals use a wealth advisor for financial planning, and one in five plan to fire their advisor due to high costs and poor service, according to new research from Long Angle, a professional network for startup founders and CEOs. Among those who use an advisor, 26% are considering switching and 18% are likely to stop using their advisor altogether.
In contrast, millionaires are very happy with personal trainers, therapists, and other professionals who help them with their overall health and family care, rather than financial matters.
“Improving your balance sheet or bank account doesn’t have the same emotional value as improving your health or family life,” says Chris Bentsen, market intelligence lead at Long Angle. “Services for personal well-being and children score highest.”
The results highlight the growing importance of so-called “soft services” for the wealthy as asset managers, private banks and other companies seek to attract and retain more wealthy clients. Once considered superficial, next to financial advice and tax planning, services for health and wellness, family and children, travel and personal development are becoming core competencies for businesses advising and supporting wealthy families.
For this study, Long Angle surveyed 114 people with assets of at least $2 million, the majority of whom had net worths between $5 million and $25 million. We asked wealthy people to rank their satisfaction with the 14 most common professional services they use, from investment advice and estate planning to sports coaching and housekeeping.
Personalized services, childcare, and education ranked top in satisfaction. The millionaires surveyed gave their personal trainers an average score of 9.3 on a scale of 1 to 10, the highest level of satisfaction of any category of service. They are also satisfied with investment visa advisors (8.8), followed by personal sports coaches and therapists. They also rated services for their children highly, such as private schools (8.3) and day care (8.2).
Financial, housing and real estate services were ranked last. The achievements in the asset management field are particularly significant. Satisfaction with wealth advisors was 7.2, with most respondents saying they don’t even use an advisor. The use of financial managers increases with wealth. Only 22% of people with assets under $5 million use an advisor, compared to 44% of people with assets over $25 million.
Their main complaint is cost. Research shows that the median spend on a financial advisor is $10,000 per year. The majority of respondents pay fees based on a percentage of their assets under management. One-third of respondents pay a flat annual fee.
Many clients have come to believe that asset-based compensation is inherently biased, as managers are paid more simply based on asset size, rather than performance or quality of service. Dissatisfaction with costs is one reason more advisors are moving to flat fees.
“Flat-fee structures reflect growing customer preferences for transparent pricing and reduced conflicts of interest,” the report said.
Wealthy investors are not only dissatisfied with the cost, but also with the service.
“Common feedback is that advisors are often slow to respond and advice is not personalized,” Bentsen said.
Accountants and tax lawyers didn’t fare so well. 82% of respondents use a CPA or tax professional for their taxes, while 42% are considering switching tax advisors. Their main complaint was that CPAs were slow to respond and were not proactive or strategic enough.
When it comes to estate planning, half of the millionaires surveyed do not use a real estate attorney, but their use is highly dependent on their wealth level. Among people with an estate of $25 million or more, 69% use an estate attorney. When it comes to satisfaction, real estate attorneys rank below pool services.
Lower ratings for financial and legal institutions and higher ratings for more personal services go beyond the predictable emotional benefits of feeling and looking better every day. Athletic trainers, sports coaches, teachers, and even house cleaners appear to be better at providing the highly customized, goal-based assistance that high-net-worth individuals seek than the cookie-cutter solutions typically provided by wealth managers and lawyers.
“What we’re hearing is that wealth managers, estate planning professionals and CPAs feel more transactional,” Bentsen said. “They don’t feel individual.”
Services for children are also highly rated and account for a high proportion of spending by wealthy people. On average, respondents spend $53,558 a year on a nanny, $30,000 a year on private school, and $20,000 a year on day care. Private schools and daycares both score above 8 on satisfaction, despite their prices.
Therapy is becoming increasingly important for wealthy people, especially young wealthy people. The millionaires gave their therapists a high average score of 8.3. The median cost of their treatment is $5,000 per year.
Almost half (43%) of millionaires under 40 use a therapist, compared to just 13% of millionaires over 50. The main benefits cited by those who used therapists were quality and influence of care, as well as kindness and personal connection.
“I think people under 40 are more proactive about their mental health and mental health,” Bentsen said.
