From One Investor to Another...



The ability to compare is one of the driving forces for much of human behavior. Comparisons produce competition, create the desire to better yourself, and pinpoint differences in one person to another, and one activity to another.

Investors frequently compare themselves to others. When discussing their investment options with financial advisors, they want to know what other investors are up to. It is not unusual for an investor to ask the question “What is everyone else doing?” when considering investment options.

For advisors, those questions are basic conversation starters. It’s a bit like fishing for information. It’s speaking in generalities.

But advisors have the ability to provide specific information that allows investors to compare themselves to other investors. The question is whether investors want to be able to read about how other investors conduct their investment business in order to compare their own behaviors with the behaviors of others.

Some providers offer to clients case studies that examine the investing attitudes and behaviors of standard investor types, based in part on segmentation like age, wealth, gender and occupation. The question is whether such case studies are of actual interest to investors, and which specific topics spark in an investor the desire to know how other investors operate.

Every month, Spectrem surveys affluent investors on topics that are of immediate interest, moving beyond the standard research Spectrem performs on a monthly basis. In December, investors were asked to offer their opinions about whether they want to know how other investors like themselves handle their portfolios.

Of more than 1,000 investors surveyed, 35 percent expressed some level of interest in reading articles which allows them to compare themselves to other investors. That included 9 percent who said they were “very interested’’ in such articles. On the other side of the coin, 33 percent of investors expressed no interest in the subject.

Among people who like to compare themselves to others or are nosy enough to want to know how other investors invest, there are specific topics about which they most want to know how other investors act. Chief among those topics is retirement planning (54 percent of investors said they would read an article on that topic).

A detailed explanation of how an investor successfully planned for retirement would be extremely helpful to those investors who are just beginning to get down to brass tacks on the issue of retirement income needs. Likewise, investors might be interested in reading about other investors who made choices that negatively impacted their retirement planning, especially among those investors who had the resources that would have allowed them to live comfortably in retirement but chose not to plan properly.

Among those investors interested in reading about the decisions made by other specific investors, two other topics generated sizable responses. Thirty-six percent of investors said they would like to read articles on how other investors improved their financial literacy and knowledge. Rather than conduct a basic internet search on a topic, these investors would like to read how others before them managed to improve their knowledge of financial topics.

Likewise, 35 percent of investors said they would read articles on how to create a trust or develop a wealth transfer program. Rather than just having your advisor tell you the story of another client’s estate plans, being able to read an article that details the specifics of that client’s wealth transfer decisions brings out more color and flavor to the tale, and allows for a more accurate comparison of portfolios and family dynamics.

Does your firm provide to clients case studies of these sorts that allow investors to compare themselves to other investors? If it does, consider an update on those materials based on the findings of the Spectrem questions. If your firm does not provide case studies to clients, it may want to reconsider that decision.



©2020 Spectrem Group



Keywords: hot topic, compare, case studies, investors, advisors, Spectrem, retirement