• 50% Of Affluent Investors Said Portfolio Performance Was More Important Than The Relationship With Their Advisor
• 57% Of Investors Said They Would Like To Get All Of Their Financial Services, Including Financial Planning, Tax Planning and Insurance, From a Single Firm

BOSTON, July 21, 2003 -- Contrary to what financial advisors may have thought in the past, affluent investors are currently placing a higher premium on portfolio performance with respect to their overall advisor relationship, according to a new study released today by Fidelity Investments.

Wealth & Advice, a nationwide study of 510 affluent investors¹ and 320 advisors, analyzed commonalities and differences in perspective in the advisor-client relationship. It revealed that while advisors and affluent investors have similar perspectives on many issues, they do not always think alike when it comes to their relationship-including the often delicate issue of investment performance.

Key findings from the Fidelity study highlight the information gap between advisors and affluent investors, and underscore the importance of understanding what high- net-worth investors expect:

• Investment Performance Is Important -- Half (50%) of affluent investors said that portfolio performance is more important than the personal relationship with their advisor, compared with one-third (31%) of advisors. More than four times as many advisors than clients (18% versus 4%) said that the personal relationship was more important.
• Satisfaction Remains High, But Differences in Perspective Exist - Nine out of ten (92%) affluent investors report they are satisfied with their primary advisor relationship, yet only one in five (20%) said they were more satisfied with their primary advisor relationship today compared with one year ago, while 54% of advisors believed their clients felt that way. Nearly 30% of affluent investors said they are more reliant on their primary advisor relationship today versus two years ago, while 59% of advisors believed their clients were more reliant.
• Referrals Are Important To Growth -- The majority of affluent investors (75%) and advisors (88%) agreed that a referral is the preferred method used for locating an advisor. Affluent investors and advisors disagree on the effectiveness of social settings, events and seminars. Forty-two percent of advisors said social settings are effective, compared with 11% of affluent investors..

"While there is extensive data available on the demographics and behaviors of affluent investors, we thought it would be helpful to understand the dynamics between advisors and their affluent clients," said Jay Lanigan, president, Fidelity Registered Investment Advisor Group. "Our study revealed that while advisors and affluent investors generally enjoy a rewarding relationship, there are divergences in their attitudes and expectations.

"As competition in the financial services industry intensifies, having a greater understanding of the needs and desires of the affluent market will be essential to helping advisors maintain strong and profitable relationships with existing clients, while acquiring new high-net-worth households," Lanigan said.

Investment Performance

Advisors have underestimated the importance of investment performance to clients. For example, almost twice as many affluent investors as advisors (63% to 33%) cited improved investment performance as a primary catalyst for transferring assets, and nearly seven out of 10 affluent investors (69%) said poor investment returns would make them consider switching to a new primary advisor. Advisors, on the other hand, were most likely (45%) to say "developing confidence/trust" was an important factor influencing client decisions on assets.

Among affluent investors, men place a higher value on investment performance than women. More than half (56%) of men, compared with 37% of women, rated performance as more important than the relationship with an advisor. Most female affluent investors (61%) believe the advisor relationship equal in importance to investment performance, while only 40% of men felt that way.

The most affluent investors were found to be most concerned with investment performance. While 84% of ultra-high-net-worth investors (those with $5 million or more in investable assets) cited performance track record as "extremely important" or "very important" to their selection of a primary advisor, about two-thirds (68%) of investors with less than $5 million in investable assets ranked performance that highly.

"Performance matters to all clients, and ultra-high-net-worth investors and men in particular, place the highest value on performance in selecting an advisor and evaluating the success of the advisor-client relationship," said Lanigan. "This survey gives useful information on the views that both advisors and their clients bring to the relationship, and should help advisors forge stronger relationships built on realistic expectations."

Practice Management

While the study reported that affluent investors are overwhelmingly satisfied with their primary advisor relationship, it also revealed that these investors have more than one advisor relationship. In fact, 56% of affluent investors already have two or more advisors. And while 58% of investors said they would like to get all of their financial services, including financial planning, tax planning and insurance, from a single firm, affluent investors with more than one advisor indicated that their top reason for these multiple relationships rests on their need for access to additional services, such as concierge services and tax planning.

More than one-quarter of affluent investors (26%) indicated that they want concierge services, but less than half as many advisors (12%) would be willing to provide these services. Similarly 26% of advisors admitted clients are asking for tax-planning services--with affluent men three times as likely to seek those services than affluent women--yet only 13% of advisors are willing to offer them. In addition, ultra-high-net-worth investors expressed the strongest desire for concierge or philanthropic services from their advisor.

"It is evident from our study that clients are looking for services beyond traditional investment and financial planning," said Lanigan. "This presents advisors with an opportunity to strengthen their position with existing clients, better pursue new clients and attract additional assets if they can develop personalized strategies based on investment services and complement them with a broader range of services, either by themselves or through a team of outside specialists."

Business Development

While there is a disconnect between what advisors and affluent investors think about the effectiveness of seminars, social settings and direct solicitation in developing the advisor-client relationship, there was broad agreement that personal referrals--by friends and by professionals such as attorneys--are the most frequently used ways to find an advisor. Seven in 10 affluent investors have referred a friend, family member or colleague to an advisor, and more than half (56%) of those who have made a referral did so because they were asked to provide one. Women are more likely than men (82% to 72%) to be referred to an advisor, but are less likely to make referrals themselves. According to the study, the top reason clients made a referral (56%) to their advisor was because they were asked for one by a friend of colleague.

"Because referrals are a key driver of client acquisition, it's important for advisors to make sure their existing clients, who are serving as their ambassadors, can clearly articulate their offering," said Lanigan. "While referrals are a critical component of business development, advisors should not rely on them to clinch the deal. Advisors need to understand that affluent investors will consider a variety of criteria when selecting an advisor, including integrity, objectivity and experience."

About Wealth & Advice

The Wealth & Advice study was conducted online by Harris Interactive for Fidelity Investments and HNW. Interviewing was conducted between March 6-17, 2003 among 510 affluent investors who have more than $1 million in non-retirement investable assets and who work with a financial advisor, while interviewing among 320 financial advisors who have a significant proportion of high-net-worth individuals in their client base was conducted between March 6-24, 2003. Data for the affluent sample were weighted for age, gender, education, race/ethnicity, and region to reflect the U.S. affluent population. "Propensity score" weighting was also used to adjust for respondents' propensity to be online. Data for the advisors sample was weighted using propensity score weighting. In theory, with probability samples of these sizes, one could say with 95 percent certainty that the results for the affluent sample have a statistical precision of +/-4 percentage points of what they would be if the entire affluent population who have advisors had been polled with complete accuracy, and the results for the advisors sample have a statistical precision of +/-6 percentage points of what they would be if the entire advisor population who have affluent clients had been polled with complete accuracy. This online sample is not a probability sample.

About Fidelity Registered Investment Advisor Group

Fidelity is the second largest provider of custody and brokerage services to the registered investment advisor marketplace, with over $73 billion in assets on behalf of more than 1,800 advisors as of June 30, 2003. Fidelity provides access to a flexible, open technology environment, extensive practice management resources, and wealth management investments and services--all backed by the long-term commitment of a private company. Dedicated relationship professionals work consultatively to help advisors choose the products and services that are in the best interests of their clients and make the most sense for their business. For more information about Fidelity's services for advisors, please visit http://ria.fidelity.com.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $1.5 trillion, including managed assets of $880.4 billion as of June 30, 2003. Fidelity offers investment management, retirement planning, brokerage, human resources and benefits outsourcing services to 18 million individuals and institutions as well as through 5,500 financial intermediaries. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

About HNW

HNW is a provider of wealth marketing solutions for the financial services industry. Through its Research, Marketing Services and Software divisions, HNW helps clients understand, attract and retain high-net-worth individuals and families, and empower the advisors who work with them. HNW clients include 15 of the top 20 U.S. financial services institutions. HNW Research is a trusted source of innovative research and information about the affluent marketplace and third party intermediaries. HNW Marketing Services offers strategic planning, branding, content development, creative services, sales and marketing collateral, advisor selling systems, web design and usability, integrated marketing and technical integration. HNW Software offers enterprise and ASP electronic publishing and content management platforms tailored to the unique requirements of high-net-worth marketing and communication programs. For more information about HNW, please visit www.hnw.com.

¹Investors who have more than $1 million in non- retirement investable assets and who work with a financial advisor.

###

HNW and Harris Interactive are independent companies and are not affiliated with Fidelity Investments.

Clearing, custody or other brokerage services may be provided by National Financial Services LLC or Fidelity Brokerage Services, LLC. Members NYSE, SIPC.