There is a fine line between professionalism and friendship that many relationships do not cross. Many individuals have seen their physician, accountant, or lawyer many times over several decades of working together, which brings a familiarity to the conversations and interactions, but might stop short of being viewed as a “friend”. Other individuals start these relationships from the perspective of friends, and it develops into a professional interaction as well. The relationship between a financial advisor and investor is very similar, with some being very close friends with their advisor, while other investors keep a more professional relationship.
Millionaire investors, those individuals with a net worth between $1-$5 million, are likely to have multiple interactions with their advisor throughout the year, making it possible for a friendship to develop. Nearly half of Millionaire investors could consider themselves to be at least somewhat friends with their financial advisor, according to recent research from Spectrem Group. Just over a quarter, 27 percent, consider their relationship with their advisor to be very professional.
Millennial Millionaires are slightly more likely to feel that their relationship with their advisor is more of a friendship, with 63 percent indicating that they are at least somewhat friends with their advisor. Only five percent of Millennials have a very professional relationship with their advisor. Interestingly, Baby Boomers are the most likely to have a strictly professional relationship with their advisor, with over a third indicating their relationship with their advisor is very professional. Millionaires with Professional occupations are also more likely to have closer relationships with their advisor, while Millionaires in Information Technology have more professional relationships with their advisor.
Having a more personal relationship may often mean that the advisor could know quite a bit about the investor’s life, but that isn’t always the case. Just under a third of Millionaires, 31 percent, feel their advisor is very knowledgeable about their personal life. That number drops down significantly for Millennial Millionaires to 11 percent, despite the fact that Millennials are more likely to view their advisor as a friend. Over half, 58 percent, of Millennial Millionaires feel that their advisor only knows a small amount about their personal life. Millionaires in Information Technology stay true to being more professional with their advisor as 43 percent of these investors indicate that their advisor only knows a small amount about their personal life. Professionals and Corporate Executives are more likely than other occupations to have advisors that are very knowledgeable about their personal lives
Deciding whether or not to develop a friendship with an advisor is a deeply personal choice. Some investors prefer to keep things professional, while others like the closeness that could be developed through a friendship. Other times it isn’t an intentional decision and something that happens more organically. Proactive and clear communication are the keys to any advisor/investor relationship, regardless of level of friendship.
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