Insurance Center

Jan. 7, 2009

According to a Spectrem Research report that was published earlier this week, increasing numbers of millionaires since September have lost between 30 and 40 percent of their net worth, and are extremely worried about the future.

The majority of those millionaires questioned say that things are different from anything they can remember with 80 percent saying that they have never seen such a bad financial crisis. An even larger number of 90 percent, are saying that they are mostly worried about the possible length of this economic downturn. Almost half or a full 47 percent are saying that they believe that the economy will not undergo long-term growth until at least 2010. The results were gathered from meetings in five cities and included on-line polling conducted in November.

Several factors as relate to insurance: In almost all categories, the average balances people held before and after the crisis went down. This includes both insurance and annuities, which are down a third in assets. Secondly another disappointing finding is that millionaires really do not like insurance companies. Only 5 percent of those polled indicated that they saw insurers in a positive frame. These were those who were worst off. Six percent indicated a positive opinion of trust companies, seven percent were positive toward accounting firms, while full service brokers were viewed positively by seven percent, banks by eight percent, mutual fund companies by nine percent, investment advisors by ten percent, independent financial planners by eleven percent and private banks by eleven percent. Insurance companies stood in ranking among those polled as the second most negatively viewed entity, at 56 percent indicating a negative view, while banks were in first place at 61 percent.

It also appears that investors are not happy with their advisors as well. While a poll last spring gave a 60 percent satisfaction rating for advisors, it had dropped to 40 percent by the time of the current poll. Investors did say however, that they are giving their advisors another 12 months to prove themselves. Business executives provide most likely to fire advisors for poor performance.

The thing most likely to cause respondents to fire their advisor was indicated to be customer service more than portfolio performance. Sixty percent say they would dump their advisor for not returning a phone call during a reasonable time, while 51 percent would drop their investor if their investments sustained long-term losses, while 49 percent said they would drop an their financial advisor if he or she did not act to contact them.

According to the report the group seen to be most upset by the present market conditions are the baby boomers, particularly those who are only five to 10 years from retirement. This group is closest to being likely to panic. Spectrum says that they represent an opportunity for advisors when they begin to move their money.