Who Needs an Advisor?


While more than half of investors currently use an advisor, a significant percentage of investors remain “advisor-less”.  Why do these investors avoid using an advisor and what could change their mind?

Spectrem Group conducted research with investors with $100,000 to $25 million of assets and asked about their usage of financial advisors.  It was surprising to find that 39% of investors do not currently use an advisor because they don’t feel an advisor would be looking out for their best interests.  Additionally, 38% indicated that they could do a better of investing than a financial advisor.  Twenty-six percent of investors indicated that financial advisors are too expensive.


The attitudes of the investors above may lead advisors to feel that it is unlikely that individuals that currently do not have an advisor will ever use an advisor.  The reality is not quite that simple.  Spectrem’s research has consistently found that as wealth increases, the likelihood to use an advisor also increases.  Additionally, older investors are more likely to turn to an advisor than younger investors. When these investors were specifically asked what would cause them to use an advisor, 36% said “a windfall of money” would cause them to use an advisor.  Twenty-two percent indicated they would use an advisor if they got tired of managing their own investments.  Fifteen percent said they would use an advisor if they felt they could get help at what they feel is a fair price.

One of the most important findings is that many investors feel an advisor will not look out for their best interests.  Financial advisors need to find ways to change the perception of investors regarding whether they care about investors.  There are multiple ways to achieve this goal whether it is through an educational approach or social media or other informational advertising.  It is likely that many of these investors will eventually turn to a financial advisor in the future.