Majority (of Assets) Opinion
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.
Which position do you take? Are you all-in with your financial advisor, or do you have several to whom you provide a portion of your investable assets to manage? Are you convinced your approach is the best one to take?
Spectrem’s new study Advisor Relationships: How to Develop Loyalty looks at the percentage of investable assets investors 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 decisions they make regarding the percentage of assets they release to their advisor.
Investors should consider how their advisors view the degree to which they are used. Do advisors assume loyalty and measure it based on the percentage of assets they manage from an individual client? From the other point of view, what reasons do you have for increasing or decreasing the percentage of assets you turn over to an advisor? The point of the study is about investor loyalty: does loyalty to an advisor play a role in how you use that financial professional?
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 turn over only about 24 percent of their investable assets to an advisor, maintaining personal control of 71.7 percent of their assets.