Millionaire investors pride themselves on their financial knowledge. Most believe they are fairly or very knowledgeable about investments. What criteria do they consider in selecting an investment? What factors most impact their investment plans? What news stories are they watching most closely in making investment decisions?
Spectrem’s 2013 research indicates that nearly nine-in-ten (88 percent) of those with at least $1 million net worth (not including primary residence) said that financial knowledge was “extremely important” or “important” to them, compared with 82 percent of those with a net worth between $500,000 and $1 million and 74 percent of those with a net worth of less than $100,000.
Just under half of Millionaires surveyed (47 percent) said they enjoy investing and it is something they do not wish to give up. With financial knowledge (and net worth) comes confidence. One-fourth of Millionaires proclaimed that they could do a better job of investing than a professional advisor, yet only 32 percent (up slightly from 30 previously) identify themselves as self-directed investors, meaning they make all financial decisions themselves.
Nearly three-fourths of Millionaires work with a financial advisor in some capacity. While Millionaires are reluctant to give credit to their financial advisors for their success, they do attribute “Smart Investing” to be one of the most important factors in their success.
How do financial advisors and providers use the confidence of these investors to gain even greater share of wallet? It seems like an impossible strategy.
-Investors who are proud of their investment success are likely to want to discuss their success with someone who they believe is knowledgeable. By listening to and applauding some of the decisions they made on their own, an advisor not only makes himself or herself appear smarter, they also begin to develop a trusting relationship with that investor.
-After applauding the success of the investor, supplement his or her knowledge with additional information regarding the class or type of investment that he or she discussed. Make sure that you demonstrate in a subtle manner your own expertise in that field.
-Begin to provide additional information about other types of investments. When the investor realizes that they do not have the time to effectively research and learn about other types of investments, they will be more likely to turn some of the investment management decisions over to a trusted advisor and friend.
Not all investors enjoy investing. But for those who do, patting them on the back and acknowledging their success is a sure-fire way to begin the development of a relationship.
To learn more about Millionaire Investors, click here for Spectrem's Millionaire Investor report