Nearly one-third of investors don’t know how their financial providers are paid, new research shows.
Cerulli Associates, Boston, published this finding in a new report, “Retail Investor Advice Relationships 2012: Meeting Investor Needs Post-Crisis.” In its third iteration, the report provides insight in the relationship between financial providers and retail investors.
Almost one-third (31 percent) of the investors surveyed in 2012 indicated they were “not sure” how their financial services provider was paid. This figure is on par with the percentage of respondents who were uncertain in 2011 and 2010: 31 percent and 33 percent, respectively.
One-fifth of the survey respondents in 2012 indicated they paid their provider on a commission-only basis, up slightly from 2011 (18 percent) and 2010 (19 percent). The 2012 figure is double the percentage of investors who last year described their advisor as fee-only (10 percent) or fee-and-commission (10 percent).
Almost one-third of investors (29 percent) last year indicated their financial provider’s services were complimentary, the survey finds.
When asked about the type of advisor they prefer to work with, more than 7 in 10 (71 percent) of investors whose primary provider channel is insurance indicated they have no preference. More than in one in 10 respondents in the insurance channel say they prefer an advisor at a large, nation organization (13 percent) or an advisor at a local bank, broker-dealer or asset manager (11 percent).
An additional five percent want an advisor who owns and operates a locally based financial advisory practice.
Among investors who have between $500,000 and $2 million in investable assets, the study adds, respondents preferences are as follows:
● 32 percent: advisor at a large, national organization.
● 20 percent: advisor who owns and operates a locally based financial advisory practice.
● 13 percent: advisor at a local bank, broker-dealer or asset manager
● 36 percent: no preference.