A new study by AssetMark, a consultant to independent financial advisors, finds critical gaps in knowledge, expectations and communication between advisors and their mass affluent clients.
Nearly half of investors in the study said they would risk 25% to 100% of their portfolios for commensurate returns. At the same time, the vast majority said they were moderate to low risk takers.
The annual Mass Affluent Investor Risk Barometer examines investor sentiment and the role advisors play in helping them negotiate risk and reward tradeoffs.
Koski Research conducted the online study on behalf of AssetMark from April 16 to 24 of 501 mass affluent investors, those with investable assets between $250,000 and $1 million. Respondents were age 30 to 70, worked with a financial advisor and were primary or shared decision makers regarding investments.
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“We believe it’s important for advisors to educate their clients and talk to them about the need to be realistic when balancing risk and reward,” AssetMark president and chief executive Charles Goldman said in a statement.
“Our research indicates that too many investors overestimate their ability to cope with significant losses.”