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Banking

America's wealthy get picky about advice

Wealthy Americans are getting more demanding when it comes to investment advice. Independent advisers claim to have tapped significant client defections from full-service brokers. The brokers say this is not happening. What's clear is that objective advice is a crucial selling point. Brokers need to do more than pile up new product offerings and must focus on their strengths, being prepared to offer their competitors' expertise when they lack it themselves.

ABOUT 2.8 MILLION people in north America have net investable assets of more than $1 million. Together they hold $8.5 trillion. By 2008, Capgemini and Merrill Lynch estimate, this will have increased to $14 trillion, with the US overtaking Europe as home to the biggest share of the world's wealth assets.

Financial services firms have already begun to beef up their offerings to profit from this growing wealth. However, the expectations of US high-net-worth investors are shifting in surprising ways that will put pressure on those in the financial services industry hoping to make money from them. Clients are demanding clarity about potential conflicts between their own interests and those of financial services providers and they want investments that suit their circumstances precisely, rather than self-serving advice on which mass-market financial product to buy.

Evidence from consultants Spectrem Group, and Capgemini Ernst & Young and Merrill Lynch's 2004 World Wealth report, suggests US high-net-worth investors are putting increasing emphasis on advice untainted by the provider's self-interest.

"High-net-worth investors want independent objective advice," says George Walper, president of Spectrem. "And it is the events in the US over the last three or four years with corporate scandals and a down market that have led them to this conclusion."

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