Why are investors in the Northeast more likely to follow their financial advisor's recommendations than investors in other parts of the country? Is there something different about how advisors in the Northeast interact with their customers? Or are investors in the Northeast simply more reliant upon or have greater trust in their financial advisor?
In Spectrem’s ongoing research with wealthy investors we discovered that when asked how often they actually follow the recommendations of their financial advisor, investors in the Northeast were much more likely than investors in other parts of the country to indicate that they follow the recommendations of their advisor. Investors were given a 0-to-100 scale and asked to rate how often they follow the recommendations of their primary advisor, with 0 being “Never” and 100 being “Always.” The national average was 70.84. Investors in the Northeast scored a 75.21 compared to the Pacific Coast, which was the lowest region, scoring only 67.62. Investors in the South scored a 71.79 while investors in the Midwest and Mountain West had similar scores at 69.37 and 69.02, respectively.
Are investors in the Northeast more likely to have a financial advisor than others? No. Overall 59 percent of investors have a primary financial advisor. Investors in the Midwest are the most likely to have a financial advisor at 65 percent compared to investors in the Northeast in which only 58 percent of investors have a primary advisor.
Are investors in the Northeast more dependent upon a financial advisor than others? Not necessarily. When asked about their reliance upon a financial advisor, 19 percent of Northeastern investors described themselves as Advisor-Dependent. This means they rely totally upon their advisor to make investment decisions. Nineteen percent of investors in the Midwest and the South also described themselves as Advisor-Dependent.
Demographic factors such as age, gender, and retirement status were similar across all regions. As far as occupation, there was little variance across the country…but the Northeast had slightly more Educators (14 percent) compared to the national average of 11 percent. Investor self-imputed knowledge levels about investments were also similar.
In fact, there were few differences in the advisor-investor relationships nationwide. When asked, “How often does your advisor contact you?”, the largest percentage of investors (37 percent) said “quarterly”. Yet only 24 percent of Northeastern investors communicate with their advisors quarterly. In fact, 30 percent of Northeastern investors communicate with their advisors monthly and 8 percent communicate with their advisor weekly. Mountain West investors are the only ones to exceed the Northeast in monthly contact at 39 percent.
So there is no single factor that explains why Northeastern investors listen more closely to their advisors than investors in other regions. It’s also impossible to tell if investors in the Northeast feel they receive better investment performance than other regions…satisfaction levels are all similar. Perhaps investors in the Northeast are just more trusting of their financial advisor or maybe they are just too busy to deal with their investments?
No matter where an investor resides, communication from advisors remains critical to growing and retaining relationships.
© 2019 Spectrem Group