Investors who work with financial advisors rarely turn over the entirety of their investable assets to their professional advisor.
Some investors like to have a personal handle on a portion of their investable assets. Some investors like to compare the investment performance of one advisor against the performance of another. Some investors do not invest the entirety of their investable assets.
Spectrem’s new study Advisor Relationships: How to Develop Loyalty* looks at the percentage of investable assets investors do turn over to their primary financial advisor for management. The research not only includes the percentage of assets given over to an advisor but the reasons for the amount of assets they release to their advisor.
Advisors can have a fairly good idea how their relationship with their client goes based on the assets that are turned over for management. While loyalty does not necessarily translate to more business, there is a correlation that can be drawn, and when a client commits more assets to their account, that indicates a satisfaction level in the work previously done.
According to the 2020 study, among investors who have a primary financial advisor, the average percentage of assets turned over to a primary financial advisor for management is 66.29 percent. On average, investors themselves controlled less than 30 percent of their assets themselves.
There is a huge disparity in this category based on the financial knowledge of the investor. Among those investors who claim to have very little knowledge of investing, they have more than 55 percent of their assets with their primary advisor, while the very knowledgeable investors maintain control of 71.7 percent of their assets, with only approximately 24 percent in an account with an advisor.
Among those investors who do not have a majority of their assets with one advisor, the main reason is that the idea of one financial professional maintaining control of a majority of their assets does not sit well. Fifty-eight percent of investors who do not have a majority of their investable assets with an advisor say that having one professional in control of a majority of their assets is not an idea they support.
On the other hand, 37 percent of those investors who do have a majority of their assets with one advisor claim that the returns have been good with that plan and they see no reason to alter their allocations.
Other responses in the study showed the wide range of reasons why investors do or do not place a majority of their assets with their primary advisor.
Keywords: portfolios, assets, primary advisor, investor, Spectrem, loyalty
*This research is part of your Spectrem subscription.