State Street & Wharton Study Encourages Financial Advisors to Consider Role of Lead Advisor to Attract, Retain Mass Affluent ...
April 12 2011 - 10:08AM
Business Wire
State Street Global Advisors (SSgA), the asset management
business of State Street Corporation (NYSE: STT) and
Knowledge@Wharton, today announced the release of a new primary
research report entitled Taking on the Role of Lead Advisor: A
Model for Driving Assets, Growth and Retention. The collaborative
report, which can be found on SPDR® University (www.spdru.com),
explores the relationship between investors and financial advisors
following the recession, the unintended consequences of using
multiple advisors, and the unique opportunities presented to
investment professionals who are willing to take on the lead
advisor role.
Taking on the Role of the Lead Advisor details the way to
structure an advisory business so as to support the lead advisor
role through an assessment of best practices among ultra
high-net-worth advisors to deliver this role. The report’s findings
are based on surveys completed by 2,196 financial advisors and 776
investors combined with insights from Wharton faculty, State Street
Global Advisors and top wealth managers to ultra-high net-worth
investors.
“The role of lead advisor creates a critical competitive
advantage at a time when investors are searching for customized
financial solutions they can trust,” said Anthony Rochte, senior
managing director at State Street Global Advisors. “The early
movers toward the lead advisor model are positioned to offer a
superior level of service that could ultimately lead to a more
profitable, rewarding practice.”
Key findings from Taking on the Role of the Lead Advisor:
- Mistrust runs at a high level among
investors. Forty-nine percent of investors manage their own
investment portfolios, 34 percent work with one advisor and 17
percent work with two or more advisors. Among those who do not use
a financial advisor, more than 50 percent do not believe the value
that advisors provide is worth the cost. The most cited reason (44
percent) for using two or more advisors is to diversify risk.
- Investors using more than one
advisor may be multiplying risk. Of investors who work with at
least two advisors, 65 percent consider one advisor to be their
primary advisor. However, more than half (55 percent) of these
respondents report their primary advisor is not aware that other
advisors are also managing their assets. As a result of this
disconnect, investors could be taking on too much – or too little –
risk.
- The absence of a single view of an
investor’s balance sheet presents an opportunity for advisors.
Regardless of asset size, nearly every investor could benefit from
the services of a competent lead advisor who integrates financial
information across investment advisors, CPAs, estate planning
attorneys and business advisors.
- Scaling the lead advisor model to
underserved markets is challenging, but rewarding. Early
adopters will have difficulty adapting the lead advisor model to a
mass affluent market; however, their first-mover advantage will
create a unique value proposition that improves client
satisfaction, retention and revenues.
Investment professionals can access Taking on the Role of the
Lead Advisor by registering as a financial professional at SPDR
University (www.spdru.com), an award-winning, free online
educational center.
About Knowledge@Wharton
Knowledge@Wharton is a free biweekly online resource that
captures knowledge generated at the Wharton School and beyond
through such channels as research papers, conferences, speakers,
books, and interviews with faculty and other business experts on
current business topics. The Knowledge@Wharton network—which
includes Chinese, Spanish, Portuguese Indian and Arabic
editions—has approximately 1.6 million subscribers worldwide and
contains more than 2,000 articles and research papers in its
database.
About SPDR University
Brought to you by State Street’s family of SPDR ETFs, SPDR
University (SPDR U) is a free online education source built
exclusively for investment professionals. State Street created SPDR
U to meet investment advisors’ growing demand for quick “anywhere,
anytime” access to high-quality educational content. With tools and
information you can put into practice, SPDR U allows investment
professionals to earn CE credits on a variety of topics, including:
ETF education; portfolio strategies; up-to-date market analysis;
actionable investment ideas; and best practices for managing your
business. Learn more by going to www.spdru.com today.
About State Street Global Advisors
State Street Global Advisors (SSgA) is a global leader in asset
management. The firm is relied on by sophisticated investors
worldwide for its disciplined investment process, powerful global
investment platform and access to every major asset class,
capitalization range and style. SSgA is the asset management
business of State Street, one of the world’s leading providers of
financial services to institutional investors.
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