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Kim Butler
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Occupational Preferences in Asset Allocation

Spectrem research shows how occupation can affect asset allocation.

| BY Kent McDill

There may not be a direct cause-and-effect relationship, but there are differences between what an investor does for a living and how that investor allocates his investable assets.

Spectrem Group’s recent study on affluent investors and their asset allocation decisions included segmented views of investors based on their occupation. The data showed that there are differences between investors who are Professionals (doctors, lawyers, accountants), Senior Corporate Executives, Business Owners and Managers.

The report Asset Allocation, Portfolios and Primary Providers examines first the distribution of assets, including principal residence, privately held business and insurance amounts, then looks at how investable assets are distributed.

The first key data point of the study is that there has been a decrease in the percentage of assets that are investable among all affluent investors. For instance, among Mass Affluent investors with a net worth between $100,000 and $1 million, their percentage of investable assets dropped to 38 percent from 43 percent only five years ago.

A similar drop was seen among Millionaire investors with a net worth between $1 million and $5 million, with 55 percent of assets listed as investable, down from 62 percent five years ago.

The drop is negligible among Ultra High Net Worth investors with a net worth between $5 million and $25 million (67 percent from 68 percent).

Separating UHNW investors by occupation, Senior Corporate Executives report the most investable assets at 72 percent. Managers have 70 percent of their assets listed as investable, Professionals are at 68 percent and Business Owners are at 61. Business Owners have a far greater percentage of their assets in their principal residence and investment real estate than investors in their other occupations. 

No matter the percentage of investable assets available, there is a preponderance of activity in equities. Interestingly, Business Owners have 60 percent of their investable assets in equities, Professionals have 58 percent in equities, and Senior Corporate Executives place 57 percent of their investable assets in equities.

Professionals show a preference for fixed income products (24 percent of investable assets), while Managers have a greater interest than others in short-term investments (18 percent).

As stated above, Millionaires have 12 percent less in investable assets than UHNW investors. While Millionaire Business Owners again have the lowest percentage in investable assets (51 percent), Managers top the list among Millionaires with 59 percent in investable assets. Again, Business Owners have much more invested in real estate options, including principal residence and investment real estate, and their privately held business.

Of their investable assets, Millionaire Professionals have 53 percent in equities, to just 45 percent among Business Owners. Millionaire Senior Corporate Executives have the highest percentage of investable assets in short-term investments (19 percent) and fixed income (21 percent).

 



About the Author


Kent McDill

kmcdill@spectrem.com

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.

 


 

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