There are trends among investors based on age, gender and wealth. Ethnic background also plays a role in how investors view and use advisors.
Spectrem’s new white paper Marketing Wealth Management to Ethnic Investors shows the differences between African-American, Asian and Hispanic investors compared to all other investors in terms of their perceived investment knowledge and advisor dependency.
Among the non-ethnic investor community, 80 percent consider themselves either fairly knowledgeable or very knowledgeable about financial products and investments. African-American investors report the same percentage, although only 17 percent consider themselves very knowledgeable to 23 percent among the non-ethnic investor group.
But only 75 percent of Asian investors and only 66 percent of Hispanic investors have that amount of confidence in their knowledgeable of investment products. Only 16 percent of Hispanic investors put themselves in the “very knowledgeable” category.
One might expect the knowledge of investments would translate to another category, advisor dependency, but it does not. Among the non-ethnic investor group, 32 percent consider themselves self-directed, meaning they make all of their own decisions without an investment advisors. But 36 percent of Hispanics and African-Americans are self-directed, and a full 41 percent of Asians handle investment decisions themselves.
Wealth plays a factor in advisor dependency as well. Many investors do not believe they have the portfolio that requires an advisor, others do not want to pay advisor fees, and still others believe they can outperform advisors in the investment field.
On the other end of the advisor spectrum, 13 percent of non-ethnic investors consider themselves advisor-dependent, meaning an advisor handles most or all investment decisions. Only 4 percent of African-Americans are advisor-dependent, 8 percent of Asians and 9 percent of Hispanic investors.
Ethnic investors have less belief in their advisor’s ability to understand their tolerance for risk as well. While 88 percent of non-ethnic investors feel their advisor understands their appetite for risk, only 65 percent of Asians, 73 percent of African-Americans and 74 percent of Hispanics feel that way.
To learn more about Ethnic Investors and download Spectrem's free Marketing Wealth Management to Ethnic Investors White Paper, click here