Spectrem Group’s study Financial Attitudes and Concerns looked at investors in three separate wealth segments and studied their tendencies when making an investment. The segments were Mass Affluent (with a net worth between $100,000 to $1 million), Millionaire (with a net worth between $1 million and $5 million) and Ultra High Net Worth (with a net worth between $5 million and $25 million).
An interesting result of the study showed that Business Owners tend to be less concerned about tax implications and much more interested in the diversity of investments and the reputations of the companies working with.
More than three-quarters of UHNW investors say they use a financial advisor to some extent, and less than half (40 percent) consider themselves knowledgeable about financial products and investments.
With UHNW investors, who were asked to place the social responsibility of their investing on a scale from 0 (no interest) to 100 (greatest interest) the average results ended up at 47.02. Only UHNW investors under the age of 53 put themselves above the mid-mark (51.11).
Among UHNW investors, the most important factor in selecting an investment was the level of risk associated with the investment. More than ninety percent (93 percent) of UHNW investors chose that factor as being significant. It was also the highest factor among Millionaires and Mass Affluent investors, but at a lower percentage; 92 percent of Millionaires and 87 percent of Mass Affluent investors chose “level of risk’’ as a factor.
Receiving slightly less interest, but remaining very high, was “diversity of investment” and again, the wealthier the investor, the more significant the factor. Ninety-one percent of UHNW investors said “diversity’’ was a factor, while 89 percent of Millionaires did and only 82 percent of Mass Affluent investors chose “diversity of investments” as a factor.
After “level of risk” and “diversity’’ the choices get varied among wealth segments.
The UHNW next chose tax implications of investments, with 84 percent of investors saying that is a factor. That percentage drops to 80 percent among Millionaires and 70 percent among Mass Affluent investors.
Eighty percent of Millionaires also said “the reputation of companies where investments are made”’ mattered. For Mass Affluent investors, that was the No. 3 choice, with 81 percent saying that was a factor, and that shows that those with less money are perhaps a bit more careful about whom they give it to. For the UHNW investors, only 76 percent said “reputation of companies’’ was a factor.
One other factor in which the Mass Affluent was much more interested than the wealthier investors was “social responsibility of investments.” Thirty-eight percent of Mass Affluent investors said that was a factor to just 30 percent of Millionaires and 25 percent of UHNW investors.
Millionaires put themselves slightly closer to the m id-mark at 49.78 and the Mass Affluent, which does trend to be a younger group, put themselves at 51.35.
The reasons given for not investing in socially responsible companies is that investment decisions are based solely on financial factors, and many people believe companies trumpet their social responsibility position without actually doing anything positive from a social standpoint.
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