Investors who depend highly on advisors often have very different portfolios than those investors with a low level of advisor involvement, says the Spectrem Group.
The Spectrem Group, a market research firm based in Lake Forest, Ill., reported results from its annual analysis of affluent investor portfolios with a focus on the level of advisor dependency. Sepectrem surveyed 2,244 investors for its 2017 "Millionaire Investor: Asset Allocation Portfolio and Primary Providers" report.
The report explored portfolios between segments such as advisor-dependent investors and self-directed investors.
Advisor-dependent investors with $1 million to $5 million had 68 percent of their assets in investable vehicles while self-directed investors had an average of 56 percent in investable assets, reported Spectrem.
Spectrem added portfolios are diversified differently based on the level of advisor involvement, as well. Advisor-dependent investors have more diversified portfolios. Thirty-nine percent of their investable assets are in equities and 31 percent are in fixed income products.
“Advisor-dependent investors … have a more balanced investment strategy between equities and fixed income products than do investors who are less advisor-reliant,” stated Spectrem in their release.
Self-directed advisors reported 54 percent of their investable assets are in equities and 10 percent in fixed income, according to Spectrem. The firm also stated that advisors tend to diversify investable assets more than self-directed investors.
Though Spectrem makes clear that its latest analysis doesn’t state whether advisor-dependent portfolios or self-driven portfolios are more successful, it does suggest that advisors of self-driven investors serve the purpose of “nudging” the client in a direction that satisfies the investor. For advisor-dependent investors, Spectrem suggest engaging those investors in the process more.
“They may not be particularly knowledgeable, but every bit of information an advisor provides makes for a more knowledgeable client, and that probably helps to increase satisfaction,” Spectrem said.