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Understanding Investors Who Depend on Advisors

Women are more likely than men to consider themselves Advisor-Dependent investors.

| BY Kent McDill

There are four different kinds of investors in terms of their use of advisors, from those who do not use an advisor at all to those who are fully dependent on the advisor for investment decisions.

Advisor-Dependent investors may have an investment plan in mind but want someone else to make it happen, or do not have the knowledge necessary to devise a plan and need an advisor to build an investment strategy based on the stated needs of the investor.

Spectrem Group has done several research studies on Advisor-Dependent Investors and found that in many cases their portfolios are less diverse, with a large amount of investable assets set in managed accounts and fixed annuities.

From Spectrem’s research Asset Allocation, Product Ownership and Perceptions of Providers,  among Millionaire investors with a net worth between $1 million and $5 million, 70 percent of investors use a financial advisor to some extent, but a majority of those are Advisor-Assisted or Event-Driven, using advisors only for advice, not direction. Fourteen percent of Millionaires consider themselves Advisor-Dependent, described as “relying on an investment professional or advisor to make most or all investment decisions”.

Among Ultra High Net Worth investors with a net worth between $5 million and $25 million, 17 percent consider themselves Advisor-Dependent Investors, even though they have so much more in investable assets than the Millionaire segment. Among Mass Affluent investors with a net worth between $100,000 and $1 million, only eight percent consider themselves Advisor-Dependent, a sign that those with less are far more interested in directing their investments themselves.

From Spectrem’s study Relationships with Advisors, Advisor-Dependent investors said they still control 13 percent of their own assets themselves, and 28 percent of assets are directed after receiving advice from an advisor, but that 59 percent of assets are completely handled by an advisor.

In broad generalities, women tend to be more Advisor-Dependent than men.  From Spectrem’s Investment Attitudes and Behaviors of High Net Worth Women Versus High Net Worth Men, 15 percent of women referred to themselves as Advisor-Dependent to just 11 percent of men. Among Ultra High Net Worth women, 23 percent consider themselves Advisor-Dependent to just 15 percent of UHNW men.

Age also plays a role. Nineteen percent of investors under the age of 45 consider themselves Advisor-Dependent, and 17 percent of investors over the age of 64 do so as well.

Advisor-Dependent investors are far more likely than other investors to recommend their advisor to others. Eighty-three p percent said they would recommend their advisor to others while just 64 percent of all investors said they would do so.

This might seem obvious, but Advisor-Dependent investors are more likely than others to move with their advisor to another firm rather than stay with the original firm. Sixty-six percent of Advisor-Dependent investors said they would make the move with their advisor while just 53 percent of all investors said they would do.

Advisor-Dependent investors are also more likely to want to work with one person rather than a team of advisors. While 69 percent of all investor prefer the one-advisor approach, 85 percent of investors who describe themselves as Advisor-Dependent say they want to work with just one professional.



Almost half (46 percent) of Millionaire Advisor-Dependent investors have their investible funds in managed accounts, well above the average of 29 percent for all Millionaire investors.

Advisor-Dependent Millionaires are more likely than others to consider their employer sponsored defined contribution plan assets in terms of their lump balance rather than worry about the individual portfolios that are being invested in. While 60 percent of all investors know the breakout of the various asset classes in their employed sponsored defined contribution, only 33 percent of Advisor-Dependent care to know (in terms of comparison, 68 percent of Self-Directed investors know the breakout of investments in their employer-sponsored defined contribution plan).

Thirty-three percent of Millionaire Advisor-Dependent investors have fixed annuities as their insurance products, well above the 15 percent for Self-Directed Investors and 26 for all investors.


About the Author

Kent McDill

Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.

In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.

McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.

McDill is the father of four children, and an active fan of soccer, Jimmy  Buffett and all things Disney.