Everybody has some experience with teachers. The educators you had in grade school may have been influential and inspiring, or perhaps it was a high school teacher who reached you in an academic manner. Then there might have been that college professor who stimulated you intellectually whom you will never forget.
For financial advisors, Educators are their own brand of investors. While many of them come into investing with the benefit of a government-funded pension, they also approach investing from a unique perspective that alters their investment preferences and attitudes.
Over an entire year’s worth of research, Spectrem has examined the investing characteristics of Educators in a report titled Get Schooled in Educators. This report looks specifically at Educators through the entire series of research studies to demonstrate how Educators are different from other occupations when it comes to making investment decisions.
“Our occupational segmentation is always one of our more intriguing portions because occupation is such an influencing factor in the lives of affluent investors,’’ said Spectrem president George H. Walper Jr. “In most cases, Educators are not people steeped in investment knowledge, and their behaviors go along with the concept that those who don’t know tread lightly.”
Over the year of research, Spectrem interviewed thousands of investors and compared those who make or made their living in education with investors from other occupations. Here are some of the ways in which Educators differ from comparably wealthy investors from other walks of life:
· The Educators tend to be older, and as a result were more likely to be retired: More than half (52 percent) of Educators were retired, and another 13 percent called themselves semi-retired, well above the percentages for investors in other occupations.
· It makes sense that Educators would be quick to point to their own education as a factor in their wealth creation, but they were also much more likely to point to frugality, inheritance and the decisions made by their financial advisors. This is important for advisors to note: Educators are seemingly more likely to take your advice to heart and to request advice.
· There are political decisions being made on both the state and federal level which impact an educator’s livelihood on a fairly regular basis. From pension funding to controversial issues such as Common Core, there are consistent arguments related to education in America. Perhaps that is why Educators are more likely than investors in other occupations to pay attention to issues such as the political environment, and government gridlock. Advisors working with Educators would do well to stay abreast of education-related government programs and legislation.
· Educators are also far more likely to be concerned with issues related to the U.S. relations with Russia and China, cyber-attacks, computer hacking and climate change issues. Perhaps it goes with the territory, but Educators are perhaps more well-informed on these types of issues and that information leads to concern.
An area in which Educators are not overwhelmingly educated is financial and investment issues. They are far less likely than investors in other occupations to call themselves “very knowledgeable’’ about financial products and investments, and far more likely to self-describe as “not very knowledgeable” or “not at all knowledgeable”. This research perhaps explains why Educators are more likely to take the advice of their financial advisors in investment decisions.
Finally, because Educators are less likely to take investment risk than investors in other occupations. Only 18 percent self-identify as “aggressive’’ or “most aggressive” compared to 216 percent of investors from other occupations. This makes sense, that investors who are uncertain of their own investment knowledge would be less risky with their investment funds than others.
Top Takeaways for Advisors
Educators are intelligent, but perhaps not well-informed in regards to investing. But they are likely to take to education related to money matters well. Interviewing your clients from educational backgrounds might lead to an informational session that could include other investors who do not consider themselves overly knowledgeable. Advisors can teach the teachers.
Many Educators have the benefit of sizable pensions, which will definitely affect retirement funding decisions. Determine the value of the pension for each Educator and determine how the investor can best augment that fund with other retirement income products.
©2017 Spectrem Group