Big-name affiliation a big deal for the affluent: Cerulli

A large proportion of wealthy clients are more comfortable with advisors at national firms, according to new research.

While investors might pick advisors based on their own financial needs and alignment of values, advisors who align themselves with larger wealth firms may have an edge in attracting affluent clients.

That’s a simple fact of the wealth industry confirmed by a recent study published in the Cerulli Edge—US Managed Accounts Edition.

According to the research, the type of firm a financial advisor is associated with significantly influences investor decisions, with investors showing a clear preference for advisors linked to large, national organizations.

Based on survey research, Cerulli found two-fifths (39 percent) of affluent investors currently advised prefer affiliating with advisors from prominent national firms, compared to 32 percent of those without advisors.

The bias for big names was particularly pronounced among wealthier investors, who also tended to be older, suggesting a higher level of trust in incumbents within the financial sector.

Despite the strong inclination toward well-known brands, a notable 28 percent of participants expressed no particular preference regarding their advisor’s firm affiliation. For this ambivalent group, there’s an opportunity for firms to enhance their market position and underscore their expertise through strategic brand marketing.

Meanwhile, small, locally operated advisory practices face an uphill battle, with only 18 percent to 19 percent of respondents from both advised and unadvised groups showing a preference for such entities. The hesitation is particularly strong among less affluent investors currently working with advisors, according to Cerulli.

“These overall preference levels present a bit of a challenge to emerging registered investment advisors (RIAs) and independent broker/dealer (IBDs) advisors, as they rarely possess high levels of unaided awareness among prospective clients in their periods of critical advice need,” Scott Smith, director of advice relationships at Cerulli, said in a statement.

Digital-only advisory services hold limited appeal for clients, Cerulli found, with just 1 percent of advised and 5 percent of unadvised respondents favoring these exclusively online advisory practices.

“While Cerulli believes digital platforms will play a crucial role in the future of advice, these results underscore the importance of human advisors as the core of wealth management competitive positioning,” Smith said.