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Portfolio > Portfolio Construction

DIY management of portfolios down among wealthy investors

By Warren S. Hersch

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Fewer mass affluent investors want to be actively involved in the day-to-day management of their investments, according to a new report.

Spectrem Group, a Chicago-based strategic consulting and market research firm specializing in the affluent and retirement markets, published this finding in a first quarter Millionaire Corner survey of households with a net worth between $100,000 and $1 million (not including primary residence).

Just over one-third (35 percent) of mass affluent investors polled say they want to manage their investments on a daily business, down from 41 percent in 2012. But 40 percent say that they still enjoy investing and would not want to stop, up from 34 percent last year.

The youngest mass affluent investors, the report adds, are likely to be most engaged with their portfolios. Fifty percent of those under the age of 45 say they like to be actively involved in he day-to-day management of their investments, compared to 30 percent of older affluent investors.

The majority of these investors (53 percent) consider themselves “fairly knowledgeable” about financial products and investments, but still have “a great deal” to learn. Only 11 percent consider themselves “very knowledgeable.”

Confidence in financial knowledge increases with wealth, the research finds. Twenty-two percent of millionaires consider themselves very knowledgeable about financial products and investments, while 62 percent say they are fairly knowledgeable.

The study adds that mass affluent investors have become more self-directed, meaning that they make their own investment decisions without the assistance of a financial advisor. Forty-four percent of respondents identify themselves as self-directed, up from 39 percent in 2009 and 40 percent last year.

Conversely, just 10 percent identify themselves as advisor-dependent, meaning they rely on a financial advisor to make most or all of their investment decisions. This is down from 15 percent in 2009 and 12 percent last year.

One of the primary reasons for this is that mass affluent investors generally do not describe themselves as wealthy. Less than half of those surveyed identify themselves this way, compared with just under 61 percent of millionaires, who are more likely to work with a financial advisor.

Of mass affluent investors, 30 percent will consult with a financial advisor for a specific need or event, such as reallocating assets or saving for retirement compared to 26 percent in 2007.

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