No two investors are identical in their investment preferences, but there are similarities in how investors in specific occupational positions distribute their investable assets.
Our study on affluent investors and their asset allocation decisions included segmented views of investors based on their occupation. The data showed that there are differences between investors who are Professionals (doctors, lawyers, accountants), Senior Corporate Executives, Business Owners and Managers.
The report Asset Allocation, Portfolios and Primary Providers examines first the distribution of assets, including principal residence, privately held business and insurance amounts, then looks at how investable assets are distributed.
The first key data point of the study is that there has been a decrease in the percentage of assets that are investable among all affluent investors. For instance, among Mass Affluent investors with a net worth between $100,000 and $1 million, their percentage of investable assets dropped to 38 percent from 43 percent only five years ago.
A similar drop was seen among Millionaire investors with a net worth between $1 million and $5 million, with 55 percent of assets listed as investable, down from 62 percent five years ago.
The drop is negligible among Ultra High Net Worth investors with a net worth between $5 million and $25 million (67 percent from 68 percent).
Separating UHNW investors by occupation, Senior Corporate Executives report the most investable assets at 72 percent. Managers have 70 percent of their assets listed as investable, Professionals are at 68 percent and Business Owners are at 61. Business Owners have a far greater percentage of their assets in their principal residence and investment real estate than investors in their other occupations.
No matter the percentage of investable assets available, there is a preponderance of activity in equities. Interestingly, Business Owners have 60 percent of their investable assets in equities, Professionals have 58 percent in equities, and Senior Corporate Executives place 57 percent of their investable assets in equities.
Professionals show a preference for fixed income products (24 percent of investable assets), while Managers have a greater interest than others in short-term investments (18 percent).
As stated above, Millionaires have 12 percent less in investable assets than UHNW investors. While Millionaire Business Owners again have the lowest percentage in investable assets (51 percent), Managers top the list among Millionaires with 59 percent in investable assets. Again, Business Owners have much more invested in real estate options, including principal residence and investment real estate, and their privately held business.
Of their investable assets, Millionaire Professionals have 53 percent in equities, to just 45 percent among Business Owners. Millionaire Senior Corporate Executives have the highest percentage of investable assets in short-term investments (19 percent) and fixed income (21 percent).
“An investor’s occupation can play a huge role in how he or she invests their investable assets,’’ said Spectrem President George H. Walper Jr. “Business owners are much different than corporate executives in terms of their motivations and financial goals. Professionals often have financial pressures that distinguish them from others. Financial advisors can benefit from taking into consideration an investor’s occupation when discussing investment options and plans.”