More than one-third (34 percent) of ultra-wealthy investors believe they can do a better job of investing than a professional advisor, but they are not quite putting their portfolios where their mouths are, according to a new Millionaire Corner wealth level study of households with a net worth of at least $25 million (not including primary residence).
Less than one-quarter (22 percent) identify themselves as self-directed investors, meaning they make all of their financial decisions without benefit of a professional advisor. Thirty-one percent, up from 28 percent two years ago, consult an advisor for specific needs, such as asset allocation and retirement planning, but ultimately make most of their own decisions. Thirty-six percent, basically unchanged from 2012 when we last surveyed this wealth group, make most of their own decisions, but not without first regularly consulting with an investment advisor. Eleven percent say they are advisor-dependent and rely on a professional to make most or all of their investment decisions.
The average $25 million plus household controls 45 percent of their assets with no professional guidance, our survey found. They only allow an advisor to have discretion over 20 percent of their assets.
Ultra-wealthy households do put a premium on their financial knowledge. In this prolonged economic downturn, almost half (44 percent) said they have done more research about investments than they have done in the past, while one-third have subscribed to additional financial publications and visit more financial websites.
The youngest ultra-wealthy households (ages 54 and under) are the most likely to be proactive about becoming more self-directed. More than half (53 percent) said they are doing more research about investments than they have in the past, while 43 percent are checking out additional publications and websites. However, this age level is the most likely (43 percent) to have increasingly sought out the services of a professional advisor because of the recent downturn.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.