As affluent Americans seek advice about investments, they are seldom turning to private bankers and trust officers, a new survey shows.
Only nine out of 150 wealthy people cited trust officers as a very important source of investment advice, and just 12 respondents classified private bankers as important advice providers, according to a survey conducted for U.S. Trust Corp., New York.
While the affluent may have been more willing to rely on their private banker as their sole adviser in the past, they are seeking out a broader range of advisers today.
Banks "need to market more aggressively," to make clients aware that they can provide affluent investors with one-stop-shopping for all their investment needs, said Vernon C. Kozlen, executive vice president and trust division manager at Los Angeles-based First Interstate Bank of California.
Broad Product Range
While accountants and attorneys can only give advice, "banks arc uniquely chartered to provide a full range of products and services," from deposit and credit to investment advice and products, Mr. Kozlen said.
However, the survey found that investment managers and attorneys were the favored advice providers, cited by 22% of the respondents. Next came stock brokers and financial planners, cited by 21%, and certified public accountants, also cited by 21%.
Certainly, the wealthy aren't bashful about seeking help. Some 60% of of affluent Americans consult professionals of some kind about their investments, the survey found.
Over the past five years, affluent people have become increasingly aware of their need for financial counseling, said Frederick B. Taylor, vice chairman and chief investment officer at U.S. Trust Corp.
That has coincided with a general rise in the financial sophistication of the people, he said.
In one of the more surprising findings of the study, younger people valued bankers' advice more than people over 50.
"I would have predicted the opposite," Mr. Taylor said.
With fewer of the nation's wealthy considering private banking or trust professionals their most important advisors, it may seem that those businesses are on the verge of extinction.
Banks, however, are adapting to the change by becoming more like other financial institutions.
Fund Sales Emphasized
To retain affluent clients, more banks are training and licensing trust officers and private bankers to sell mutual funds and other investment products, or hiring professionals with securities licenses to provide advice.
U.S. Trust views its competition as any financial information provider and functions as an investment firm, Mr. Taylor said. "We have to do that to compete with savvy brokerage firms, investment boutiques, and other trust companies."
When it comes to buying mutual funds, wealthy investors don't object to paying for financial advice.
Only 38% of affluent investors polled said sales fees were an important factor in selecting a mutual fund.
The rich base their mutual fund choices on the fund family's reputation, future performance prospects, and the types of assets held in the fund.
Mr. Taylor predicted that mutual funds will continue to be one of the most popular investments for affluent investors.
