The Story of Occupations and Portfolios


You ask someone “What do you do for a living?’ and you often automatically form an opinion about that person. After all, dentists are different from teachers. And who knows what to make of that IT guy.

Occupations often tend to draw like people, which is why we believe we can stereotype physicians and CEOs. While such stereotypes are often misleading or even wrong, research shows that there are differences between occupations and he decisions they make about their finances.

Such research is the core of Spectrem’s occupational segmentation in its wealthy investor series of studies, including the recent look at affluent investor portfolios. In Asset Allocation, Portfolios and Perceptions of Providers, the Spectrem study looks at how investors from different occupational backgrounds differ in terms of their investable assets.

“We segment our investors in order to provide advisors with a better understanding of their investors, and the occupations segmentation often provides the clearest difference between investors,’’ said Spectrem president George H. Walper Jr.     

Among UHNW investors, the top three occupations in terms of percentage of investors was Professionals (meaning doctors, lawyers and accountants), Senior Corporate Executives (including any investors who call themselves ‘’managers”) and Business Owners. Those three occupations are all lucrative but the investors are very different from each other in terms of their financial background, as well as their present and future financial needs.

Advisors who work with Ultra High Net Worth investors with a net worth between $5 million and $25 million are likely to recognize their clients in the descriptions that result from the research findings.

For example, there is a marked difference between investors from different occupations regarding the investor’s percentage of total assets which are considered investable assets. While UHNW Professionals have 75 percent of their total assets side aside as investable, Business Owners only have 63 percent of their total asset as investable assets. They are more invested in their privately held business and investment real estate, and as a result have fewer dollars available for investing with an advisor.

Professionals, especially the doctors and lawyers, also have an investment in their business due to equipment, but much of that investment is likely already paid for and not requiring additional or future investment quite as a Business Owner’s company does.

Oddly, Business Owners turn over to advisors a much larger portion of their investable assets, 23 percent to just 14 percent from Professionals and 19 percent from Senior Corporate Executives. Investors in the last two occupations are more likely to have funds in rollover and contributory IRAs than are Business Owners, who may not have been invested in 401(k)s at any time in their lives (often the source of rollover IRA accounts).

Wealthy Business Owners are an interesting breed for advisors to work with. They are often so busy maintaining their business interests that they tend to be more dependent on the time and service of an advisor. With the amount of money they have invested in their business, they are interested in diversifying their portfolio with products and services outside of their business model, and they use advisors to assist them.

Only 50 percent of UHNW Professionals have managed accounts, and that is an occupation advisors should be working to attract more investors from. Seventy percent of Business Owners have managed accounts. In regards to robo-accounts, Senior Corporate Executives lead the occupational league with 12 percent participation.


Top Takeaways for Advisors

The study examines the product ownership of investors based on occupation, and shows the difference between these investors in terms of short-term and equity product ownership. Advisors can go into meetings with clients from these occupations and have a good idea where to aim their product pitches to attract the investors and reduce the time of the conversations.

There are also details about which investors prefer to talk about alternative investments (Professionals lead the pack) which again can serve to make an advisor more in tune with the investor’s initial intentions related to investment products and services.

©2018 Spectrem Group