Advisor-dependent investors look to their advisor to make almost all of their investment decisions.
Investors not only use their advisors for different purposes, they use them with varying degrees of dependence. While some investors use advisors only for special purposes such as retirement planning, others give their investment outlook entirely over to a professional.
Let’s begin by noting that most investors use advisors. It ranges from 68 percent among mass Affluent investors with a net worth between $100,000 and $1 million, to 82 percent among Ultra High Net Worth investors with a net worth between $5 million and $25 million.
To gain deeper insights into how investors work with their advisors, Spectrem separates behaviors into four groups, from those who are relatively advisor-free (Self-Directed) to those who admit to being almost entirely dependent upon a financial advisor (Advisor-Dependent).
Even within those investors who consider themselves to be Advisor-Dependent, there are degrees to which they allow advisors to control their financial futures.
By definition, an Advisor-Dependent investor is one who relies on an investment professional or advisor to make most or all investment decisions.
From the standpoint of wealth level, there is only a minor difference in how many investors consider themselves advisor dependent. Among Mass Affluent investors, 11 percent consider themselves advisor dependent. Among Millionaires (with a net worth between $1 million and $5 million) and Ultra High Net Worth investors, 14 percent self-report as advisor dependent.
Similar percentages are reported among Millionaires, with only 37 percent under the age of 36 allowing their advisor to handle the vast majority of their financial needs to 60 percent of those over the age of 64.
There is a wide difference in advisor dependency based on occupation. While 64 percent of managers trust their advisor with the vast majority of their financial needs, only 41 percent of Millionaire Business Owners report the same level of advisor usage, and only 46 percent of Millionaire Senior Corporate Executives do so.
Advisors also need to understand that many investors who consider themselves advisor dependent still want to have some involvement in the decision-making process. For example, 30 percent of Millionaire investors who consider themselves advisor dependent make some decisions themselves without the aid of an investor.
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 www.nba.com. 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.