As Assets Grow, Investors Want More Advice

The greater the percentage of assets an investor has invested, the more likely he is to adopt the new solution-oriented products and services emerging from investment product providers and financial advisory firms.

According to the study from Financial Research Corporation (FRC), “Evolution of the Solution: Investor Perceptions of Solution-Oriented Products & Services,” the larger the percentage of total investment assets held in employer-sponsored retirement plans, the more interested participants are in solutions like lifecycle funds. Likewise, those with larger percentages of assets held in personal accounts, including IRAs and taxable investment accounts, are more likely to use the services of an adviser.

However, even as people turn to advisers, views about the most important role of advisers are changing, FRC said. Just over one-half of investors (52%) thought that the relationship management skills of an adviser, such as the ability to assess investment goals or risk tolerance, were most important, while 48% thought that investment skills, such as the ability to identify strong-performing products or adjust portfolios to changing market conditions, were most important.

A growing portion of investors are seeing the value in investment solutions created at the firm level. Greater than one-half of surveyed investors responded that model portfolios or short-lists of pre-researched investments created by manager research teams at financial advisory firms would result in the optimal portfolio, versus financial advisers choosing from all available options.

The research also found investors are most likely to be motivated to seek information about investment products and services by a desire to become more knowledgeable about their finances, the announcement said. However, the youngest investors (30-40) were the more likely to be motivated by fear or anxiety about their financial futures, and the oldest investors (70+) were the most likely to be motivated by a sense of opportunity.

FRC said its study was designed as a tool for investment product firms and financial advisory firms to develop and market solution-oriented products and services that appeal to their target audiences. It identifies factors that drive investors to take action by asking their preferences for investment products and services, versus how they feel about existing products and services. Investor preferences are analyzed by demographic characteristics, including age and wealth level, as well as behavioral factors, such as purchasing methods.

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