Ethnic Investors and Advisor Relationships


Advisors can judge the quality of their relationship with investors by whether they refer the advisor to others they know, and if they are willing to move with them from one firm to another.

Among investors from key ethnic segment backgrounds, the relationship markers are mixed.

Spectrem’s series of reports on ethnic investors – the Ethnic Segmentation Series – shows that affluent investors from African-American, Asian or Hispanic backgrounds have different attitudes towards recommending their advisors to others than investors not among those ethnic groups.

For instance, 59 percent of the non-ethnic investors surveyed said they had referred their advisor to someone they knew. References from friends and family are how a majority of investors find their advisors.

While 60 percent of affluent African-American investors had recommended their advisor to others, only 54 percent of Hispanic investors had done so, and only 44 percent of affluent Asian investors had recommenced their advisor to others. Asian investors, by the way, were shown to be the least likely among the ethnic investor groups to have a financial advisor.

Occasionally, advisors leave one firm to join another, and then it is up to the investor to decide if he is going to follow his advisor to his new company or remain with the previous firm and work with a different advisor. Among the non-ethnic group investors surveyed, the opinion was almost evenly split, with 51 percent moving with their advisor and 49 percent staying with the original firm.

Affluent Asian investors were the most similar in that regard among the ethnic investors, with 54 percent staying with the firm and 46 percent moving with their advisor. Hispanic investors were far more likely to move with their advisor, with 56 percent saying they would stay with the person rather than the company.

Among affluent African-American investors, 57 percent would stay with the original company and 43 percent would switch with the advisor.

The safety and reliability of the brand name was the main reason investors would stay with the original company rather than switch, but 33 percent of Asian investors said switching with the advisor would be too much of a hassle.