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Millionaires are increasingly unhappy with their wealth managers and accountants, but they like their personal trainers and therapists, a new survey shows.
Only a third of millionaires use a wealth advisor for their financial planning and 1 in 5 are considering firing their advisor due to high costs and poor service, according to a new survey from Long Angle, the professional network for startup founders and CEOs. Among those who use an advisor, 26% are considering changing advisors and 18% may stop using an advisor altogether.
In contrast, millionaires are most satisfied with their personal trainers, therapists and other professionals who help them manage their general well-being and family care, rather than their financial problems.
“Improving your balance sheet or bank account doesn’t provide the same emotional value as improving your health and family life,” said Chris Bendtsen, head of market intelligence at Long Angle. “Services aimed at personal well-being or your children get the highest scores.”
The findings highlight the growing importance of “software services” for the wealthy, as wealth managers, private banks and other firms seek to attract and retain more wealthy clients. Once considered superficial alongside financial advice and tax planning, services related to health and wellness, family and children, as well as travel and personal development, are becoming essential skills in the field of advice and assistance to wealthy families.
For the study, Long Angle surveyed 114 people worth at least $2 million, with the majority having a net worth between $5 million and $25 million. They were asked to rank their level of satisfaction on 14 of the professional services most commonly used by the wealthy, from investment advice and estate planning to sports coaching and housekeeping.
Personal services, childcare and education top the satisfaction criteria. On a score of 1 to 10, the millionaires surveyed gave their personal trainers an average rating of 9.3, the highest satisfaction of all service categories combined. They are also satisfied with their visa investment advisors (8.8), followed by their personal sports coach and therapist. They also place a high value on services for their children, including private schools (8.3) and daycares (8.2).
Financial, real estate and real estate services come in last place. The results in terms of wealth management are particularly remarkable. The wealth advisor satisfaction level was 7.2, with most respondents saying they don’t even use an advisor. The use of financial managers increases with wealth. Among those with assets of $5 million or less, only 22% use an advisor, compared to 44% of those with assets of $25 million or more.
Their main complaint is cost. The median spending for financial advisors is $10,000 per year, according to the survey. A majority of respondents pay fees based on a percentage of assets under management. A third of respondents pay a flat-rate annual contribution.
Many clients increasingly view asset-based fees as inherently unbalanced, as the manager is paid more simply based on asset size rather than performance or quality of service. Frustration with costs is one reason more advisors are opting for flat fees.
“Flat rate structures reflect a growing customer preference for transparent pricing and reduced conflicts of interest,” the report said.
Beyond the cost, wealthy investors are also frustrated with the service.
“The general feedback is that advisors are often slow to respond and the advice is not personalized,” Bendtsen said.
Accountants and tax lawyers don’t fare much better. While 82% of respondents use a CPA or tax professional for their tax returns, 42% are considering changing tax advisors. Their main complaints were about CPAs being slow to respond and lacking in proactivity or strategy.
When it comes to estate planning, half of the millionaires surveyed do not use an estate lawyer, even though their recourse depends heavily on the level of wealth. Among those with $25 million or more, 69% use an estate attorney. When it comes to satisfaction levels, probate lawyers rank below pool services.
The low ratings given to financial and legal providers, and the high ratings given to more personalized services, go beyond the predictable emotional benefits of feeling and looking better every day. Athletic trainers, athletic trainers, teachers, and even housekeepers appear to be better suited to providing the kind of highly personalized, goal-oriented help that the wealthy seek, rather than the cookie-cutter solutions commonly offered by wealth managers and lawyers.
“What we’ve heard is that wealth managers, estate attorneys and CPAs are feeling more transactional,” Bendtsen said. “They don’t seem personalized.”
Services for children also get high marks and account for a significant portion of spending by the wealthy. Respondents spend an average of $53,558 per year on their nanny, $30,000 per year on private school and $20,000 per year on daycare. Both the private school and daycare received a satisfaction score above eight despite the price.
Therapy is becoming increasingly important for the wealthy, especially younger people. Millionaires gave their therapists a high average rating of 8.3. Their median spending on therapy is $5,000 per year.
Nearly half (43%) of millionaires under 40 use a therapist, compared to only 13% of millionaires over 50. Among those who used a therapist, the top benefits cited were quality of care and impact, as well as kindness and personal connection.
“I think people under 40 are more proactive about their mental health and emotional well-being,” Bendtsen said.