The following is a massive over-simplification that still explains a dichotomy between affluent investors:
There are investors who like to consider their investments daily, and there are investors who prefer to invest and then pay no attention to their portfolio for a lengthy period of time.
There are obviously ranges between those two types of investors. Some investors check their portfolios on a schedule. There are levels of involvement among those investors who pay close attention to their investment decisions and return on investment.
But, if asked to pick one style of investing over the other there is a near-equal split between affluent investor. It is only when those investors are segmented by age, wealth or occupation, that a true indication of habits comes out.
According to Spectrem’s study Evolving Investor Attitudes and Behaviors, 51 percent of all investors agreed with the sentence “I like to be actively involved in the day-to-day management of my investments.” That indicates that there is a near-even split between investors who like to think about their investments daily and those who are more passive about their investment status.
However, when investors are segmented, the results are much different, and follow a pattern.
For example, when segmented by wealth, the wealthier the investor, the more likely they are to be involved on a daily basis. It reaches 68 percent of investors with a net worth between $10 million and $15 million and drops to just 39 percent of those with a net worth between $100,000 and $500,000. Those net worth numbers do not include the value of their investor’s primary residence.
There is a very distinct difference in investors based on their self-expressed knowledge level. Among investors who consider themselves to be very knowledgeable about finances and investing, 80 percent say they like to be actively involved in the management of their portfolios. Among those investors who claim very little knowledge, their level of active participation is down to 17 percent.
Advisors need to consider the knowledge level of their client regarding a number of services offered. Clients with little knowledge are more likely to turn over all decisions to their investor, but there may be those clients with little knowledge who would like to be more actively involved but feel their lack of financial education prevents them from participating.
Advisors are not required to be teachers of financial literacy, but they can benefit their clients and their client relationship by offering education to those investors who would like to learn more about what is being done with their investable assets.
The study also reveals that Business Owners are much more likely to want to have a daily hand in the management of their portfolio. Sixty-eight percent of Business Owners say they like to deal with their investments daily, while only 39 percent of Educators like to have regular participation in the process. The differences between investors based on occupation regularly show up in Spectrem research, and this point indicates one of the largest differences.
©2019 Spectrem Group