Fidelity^® Finds Millionaires and Advisors Differ On Market Outlook, Asset Allocation, Communications Preferences

New Report Helps Brokers and Advisors Leverage Findings To Identify Growth Opportunities

BOSTON, June 16, 2011 -- Fidelity Investments® today unveiled the third report in its Insights on Advice series to uncover where the views of financial professionals and millionaire investors differ in order to help brokers and advisors identify opportunities to strengthen their existing relationships and potentially grow their practices.

The report, which contrasts findings from the Fidelity^® Millionaire Outlook¹ with the Fidelity Broker and Advisor Sentiment Index^SM2 , found that millionaires and their broker and advisor counterparts differ in three primary areas:  1) market confidence -- with brokers and advisors more bullish; 2) communications preferences -- with millionaires twice as likely as brokers and advisors to use technology-enabled media such as text messaging and preferring to receive communications via email; and 3) asset allocation -- with brokers and advisors planning to weight emerging/international markets and annuities more heavily in their portfolios. 

“With 81 percent of millionaires tapping the insights of at least one financial advisor³, it’s clear that there are many core areas in which these financially savvy leaders connect,” said Michael R. Durbin, president, Fidelity Institutional Wealth Services^®.  “Yet, examining the disparities between the groups presents some clear opportunities for brokers and advisors to fine-tune their approaches -- specifically, by recognizing millionaires’ more conservative economic outlook and investment approach.”
Brokers and Advisors are More Confident in Market Outlook than Millionaires

According to Fidelity’s research, brokers and advisors are more confident than millionaires across all key financial indicators: the economy, stock market, real estate, consumer spending and business spending over the next 12 months.  The groups differed most on their outlooks for the stock market, economy and business spending.  Both are concerned about the potential for a real estate rebound.

Overall Economic Views for the Next 12 Months (Confidence Levels*)


* Using a scale where +100 represents the most favorable outlook, zero is neutral and -100 is the most negative outlook.

Source: Fidelity Millionaire Outlook, October 2010; Broker and Advisor Sentiment Index, November 2010
 

Millionaires and Their Broker and Advisor Counterparts Plan to Increase Investments, But Not Always in the Same Categories

Millionaires as well as brokers and advisors plan to increase portfolio investments in the coming year.  However, in keeping with their more conservative outlook, millionaires more strongly favor fixed-income investments as compared to brokers and advisors.  The two groups also differ when it comes to annuities and domestic versus international investing, with brokers and advisors far more interested in up-weighting their international/emerging markets portfolios (44 percent vs. 26 percent for millionaires) as well as annuities (60 percent vs. 13 percent for millionaires).

 

Source: Fidelity Millionaire Outlook, October 2010; Broker and Advisor Sentiment Index, November 2010

Millionaires Adopting Communications Technologies More Quickly Than Brokers and Advisors

Millionaires are embracing electronic, social media and mobile communications at a significantly higher rate than brokers and advisors. 

Twice as many millionaires currently use -- or are willing to use -- technology-enabled media, such as text messaging, “smartphone” applications and social media (85 percent) versus brokers and advisors (43 percent).  More than one-third of millionaires (34 percent) say they use social media professionally -- most prominently, LinkedIn^® (28 percent, while only 16 percent of brokers and advisors use the professional networking service).  Two-thirds of millionaires (66 percent) said they would like to use technology-enabled media with their advisors.

The survey also revealed that brokers and advisors overemphasize face-to-face meetings, with many millionaires preferring to receive communications via email.  Because of this comfort level with technology, 37 percent of millionaires said they would definitely consider working with a non-local advisor.

“Investing in and adopting communication technologies not only may help brokers and advisors cater to their clients’ preferences, it also could save them time and money,” said Sanjiv Mirchandani, president of National Financial^®, a Fidelity Investments company and the nation’s second largest clearing provider.  “With the average age of advisors increasing, the younger generation of brokers and advisors have an opportunity to differentiate themselves through their communications approach and attract new clients --specifically, clients under 50 who are most actively using technology.”
 
LinkedIn Widely Used Among Millionaires 50 Years and Younger

Source: Fidelity Millionaire Outlook, October 2010; Broker and Advisor Sentiment Index, November 2010

What Millionaires Value in an Advisor or Broker
Millionaires who work with advisors cite superior performance (60 percent), wealth protection (47 percent), and access to investments (36 percent) as the top three benefits of the relationship.  Comprehensive planning is the top reason millionaires report starting an advisory relationship -- with strong interest in the areas of retirement income and tax planning.

According to the report, a majority of millionaires (56 percent) want to work with a financial professional that shares a similar philosophy about investing, yet brokers and advisors focus their prospecting activities less on philosophy and more on demographic profiles such as asset levels, age and profession.

“This report highlights the importance of brokers and advisors creating robust public profiles that tell their stories, including their personal investing philosophies and how they --and others -- value their services,” concluded Mirchandani.

About the Fidelity Millionaire Outlook
The Fidelity Millionaire Outlook is a study of U.S. households with investable assets of at least $1 million, excluding workplace retirement accounts and any real estate holdings.  Northstar Research Partners conducted this year’s survey online during the period of Oct. 18-29, 2010.ⁱ The results reflect responses from 1,011 financial decision makers in U.S. millionaire households.  The data reflect a margin of error of +/-3%.  The experience of the millionaires who responded to the Fidelity Millionaire Outlook survey may not be representative of the experiences of all investors and is not indicative of future success.

About the Broker and Advisor Sentiment Index
The Fidelity Investments^® Broker and Advisor Sentiment IndexSM is an analytical measurement of U.S. brokers’ and advisors’ satisfaction with their profession and their current firm.  The survey of 1,046 U.S. investment professionals was conducted online in late 2010 by Northstar Research Partners, an independent third-party research firm.  The respondents came from a mix of independent, wirehouse, insurance, regional, bank and RIA firms, weighted to accurately reflect the industry composition.

About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.7 trillion, including managed assets of more than $1.6 trillion, as of May 31, 2011.  Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms.  For more information about Fidelity Investments, visit www.fidelity.com.

1 An in-depth survey analyzing the investing attitudes and behaviors of more than 1,000 millionaire households with Investable assets of $1 million, excluding workplace retirement accounts and any real estate holdings
2 The Fidelity Investment’s Broker and Advisor Sentiment IndexSM is an in-depth survey analyzing the attitudes and behaviors of 1,046 financial professionals from independent broker-dealers, national brokerage firms, RIAs, insurance companies, banks and regional broker-dealers.
3 Fidelity Millionaire Outlook, October 2010

i Northstar Research Partners is an independent third-party research firm and is not affiliated with Fidelity Investments.

National Financial is a division of National Financial Services LLC.  Fidelity Institutional Wealth Services is a division of Fidelity Brokerage Services LLC.

The registered trademarks and service marks appearing herein are the property of FMR LLC. National Financial Broker and Advisor Sentiment Index is a service mark of FMR LLC.

Clearing, custody or other brokerage services may be provided by National Financial Services LLC, 200 Seaport Boulevard, Boston, MA 02210 or Fidelity Brokerage Services LLC, 900 Salem Street, Smithfield, RI 02917, Members NYSE, SIPC.

Fidelity Investments Institutional Services Company, Inc., 100 Salem Street, Smithfield, RI 02917

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