All in all, half of affluent Black and Hispanic investors (53 percent each) said they are comfortable with the fees they pay their advisor. Asians are less so.
Financial advisors often need to tailor their advice based on the investor’s age, gender, wealth level, occupation and advisor dependency. They also need to consider the investors’ ethnic background. Spectrem’s new study in its Ethnic Segmentation Series – “Advisor Relationships and Changing Advice Requirements” – examines the different ways ethnic investors relate to the advisor with whom they work. The study looks at investors of affluent African-American, Hispanic and Asian backgrounds.
A majority of affluent investors overall (52 percent) tend to think the services of a professional advisor are very expensive. This concern is heightened about ethnic investors surveyed, especially affluent Asians (64 percent, followed by 59 percent of Blacks and 56 percent of Hispanics).
As with their non-ethnic counterparts, a lesser percentage allows that they are relatively unconcerned about financial advisor fees as long as their assets continue to grow. Three-in-ten affluent Hispanics and Asians expressed this view vs. 26 percent of Blacks.
Affluent investors are confident in their financial knowledge and investment acumen and ethnic investors are no exception. On a scale of 0 to 100 in which 100 equals a complete understanding of their advisor’s fee structure, affluent Asians ranked nearly 65, Blacks 66.43 and Hispanics nearly 72.
Each ethnic segment prefers to pay fees for financial or investment advice rather than having the cost of the advice built into product sales commissions. A majority of affluent ethnic investors are of the mindset that many financial advisors are biased toward a certain group or type of products, while at least four-in-ten believes they are more concerned with selling their products than helping their clients.
When it comes to fees vs. commissions, nearly two-thirds of affluent Asians express their preference for the former, compared with 57 percent of Blacks and 52 percent of Hispanics. These affluent investors also tend to prefer to pay a fixed fee for financial or investment advice rather than having their fees tied to product performance.
All in all, half of affluent Black and Hispanic investors (53 percent each) said they are comfortable with the fees they pay their advisor. Asians are less so at 40 percent.
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.