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Ed Meek
CEO/Investment Advisor

Edge Portfolio Management

City:Winfield

State: IL



BIOGRAPHY:
At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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Do Snap Judgements Influence Financial Advisor Selection?

People make snap judgments after seeing a face for just a tenth of a second and their opinions don’t change even after being given more time.

| BY Donald Liebenson


Does the maxim, “You can’t tell a book by its cover” have implications on how individuals choose a financial advisor? Yes, according to Snap Judgments: Do First Visual Impressions Impact Financial Advisor Selection?a Spectrem Group white paper.

Individuals have varying degrees of engagement with a financial advisor. Some will consult with an advisor about a specific life event, such as retirement. Others will consult with an advisor periodically but still elect to make their own financial and investment decisions. Still others will entrust an advisor with all of their financial and investment decisions.

Individuals are most likely to seek out an advisor if they come into a financial windfall, Spectrem Group research finds. Other common impetuses to hire a financial advisor are instances in which an individual felt they could receive professional counsel for what they perceive to be a fair price, and in the event self-directed investors become tired of managing their investments.

How do you search for a financial advisor? Beyond referrals from trusted acquaintances (the most common method), the search often starts with a website or an advertising photo. But this scenario may instantly put some advisors behind the 8-ball, because according to Spectrem’s white paper, when shown a group photo of eight people and asked, just by looking at the photo, who they would select as their financial advisor, the largest percentage of respondents selected an older white male over female advisors, young advisors or advisors of color.

People make snap judgments after seeing a face for just a tenth of a second and their opinions don’t change even after being given more time, according to a 2006 Princeton University study by psychologists Alexander Todorov and Janine Willis.  “The link between facial features and character may be tenuous at best, but that doesn't stop our minds from sizing other people up at a glance," Todorov notes. "We decide very quickly whether a person possesses many of the traits we feel are important, such as likeability and competence, even though we have not exchanged a single word with them. It appears that we are hard-wired to draw these inferences in a fast, unreflective way."

How is that working out for us?  For the Spectrem study, we surveyed three wealth segments:  Mass Affluent, or non-Millionaire, investors with a net worth between $100,000 and $1 million; Millionaires with a net worth between $1 million-$5 million, and Ultra High Net Worth investors with a net worth between $5 million and $25 million (net worth does not include the value of their primary residence). These affluent investors were shown a group photo of eight adults, each representing a different combination of race, gender and age. They were asked, based solely on the photograph and without receiving any other information about each person, which person they would be most likely to select as their financial advisor.

One-third of surveyed investors indicated they would pick the older white male, followed by the middle-aged white male (23 percent). Thirteen percent, based solely on the photograph, selected the young white female, while 12 percent picked the older white female and the middle-aged white female respectively.  The young white male, the middle-aged minority male and the younger minority female each were selected by less than 10 percent of respondents.

Analyzed by age across all wealth levels, we find that the older white male would most likely be chosen by affluent investors based solely on a photograph. But among the youngest investors, 48 and under, the middle-aged white male was most likely to be selected.

Writing on her website, Erica Peitler, an executive coach specializing in leadership development, observed, “Having a deep and diverse talent bench is crucial!”  But a 2015 Investment News study reported that roughly 80 percent of the 434,000 financial advisers in the nation are white, even though whites make up only 63 percent of the U.S. population.

African-Americans, Asians and Hispanics/Latinos make up 20 percent of financial advisers, even though they constitute 36 percent of the population, while almost 6 percent of advisers are Asian, 8.1 are African-American and 7.1 are Hispanic. An accompanying survey further found that a majority of white, black, Asian and Hispanic financial advisors either “agree” or “strongly agree” that the minority community is under-served by financial advisors.

But firms are taking note of society’s cultural and demographic changes and taking steps to recruit more women, minority and ethnic candidates. This is a positive development in fighting entrenched cultural attitudes and promoting acceptance of a more diverse field of advisors. As the industry diversifies, it will broaden the perceptions of what a trustworthy and expert financial advisor looks like.

Top Takeaways for Investors:


 

As the financial service industry takes steps to recruit more women, minority and ethnic advisors to reflect society’s cultural and demographic changes, individuals are advised to consider several factors in choosing an advisor that is the best fit for them. Among them: 

·         Advisor designations (CFA, CFP, etc.), which indicate expertise and training.

·         Fees and commissions charged

·         Investment track record

·         The size of the advisor’s firm? Do you prefer association with a large firm associated with a well-known brand? Do you think a smaller firm will provide more personalized service?

·         Personality. Do you get the sense you and the prospective advisor can work well together? 



About the Author


Donald Liebenson

dliebenson@millionairecorner.com

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. 

 


 

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