Not all ultra-high-net-worth investors are alike. Doctors, lawyers, accountants and other professionals have a unique approach to investing, according to a new study by Spectrem.
The study of investor behaviors and attitudes includes segmentation of investors by occupation, and compares professionals against business owners, managers and senior corporate executives. All have a net worth in the $5 million-to-$25 million range.
Understanding how professionals stand out can prove helpful to advisors who serve them, Spectrem said.
“Knowing how an investor’s profession affects investment attitudes makes it so much easier to make recommendations and satisfy the investor,’’ Spectrem’s president, George Walper, said in a statement.
“In the case of professionals, many of their investment behaviors are easily explained based on their background of investing in themselves first.”
Researchers asked investors which of about a dozen factors played a role in their personal wealth creation. Not surprisingly, nearly all selected “hard work” as a factor.
Ninety-seven percent of professionals selected “education,” compared with 89% of senior corporate executives who made that selection. In addition, 64% of professionals said “luck” was a factor, and 52% said “decisions made for me by my financial advisor.”
Professionals also had the highest incidence among respondents, at 35%, of selecting “inheritance.”
What Trump Bump?
Seventy percent of wealthy professionals in the study, the highest percentage of respondents from any one occupation, said their financial situation today was better than a year ago.
At the same time, just 37% of professionals believed the results of the November presidential election would benefit their investment returns versus 47% overall.
Spectrem said it was noteworthy that two-thirds of professionals, again the highest percentage by occupation, admitted to concern over the Trump administration.
Spectrem suggested that advisors working with professionals check whether they fit the characterization that the last year had been an especially good one for investments. Then ask why, and suggest increasing investment in those areas that worked well for the client.
For the first time, Spectrem said, it asked investors their feelings about the suggestion that the federal government should forgive all or most college student loans — a topic of interest to anyone who has ever taken a student loan, including doctors, lawyers and dentists.
Sixteen percent of professionals said the government “definitely’’ or “probably” should forgive college student loans. In contrast, only 5% of senior corporate executives expressed a similar sentiment on the topic.
Spectrem said it was possible that many professionals still have liabilities related to their college and graduate work, so finding out those liabilities would benefit the investor-advisor relationship because the advisor would have a better idea what weights exist on the investor’s portfolio.
The study also found that professionals were likeliest among investors segmented by occupation to consider the reputation of the companies where investments are made, and the past track record of investments.
Professionals were by far the most interested in socially responsible investing segmented by occupation. Spectrem said this meant advisors should consider pitching such investments to the doctors and lawyers among their clientele.