Less than one-third of Main Street investors works regularly with a financial advisor, according to Millionaire Corner research, which explores why the client-advisor relationship may be breaking down.
Main Street Americans, those with investable assets of $100,000 up to $1 million, are most apt to describe themselves as “self-directed” or “event-driven” investors, according to a study on advisor relationships conducted by Millionaire Corner in the third quarter of 2011.
The self-directed (35 percent) manage their finances without any professional help, while the event-driven (34 percent) seek financial advice concerning certain life events, such as planning for retirement. Only 10 percent rely entirely on an advisor to make all their financial decisions and describe themselves advisor-dependent. Twenty-one percent consult with an advisor, but make their own decisions, and are considered to be advisor-assisted.
Main Street investors may be in the driver’s seat, but they freely admit that they don’t necessarily know where they are going, describing themselves as generally lacking in financial knowledge. So, why don’t more Main Street investors seek out the services of a financial advisor?
As a group, Main Street Americans appear sensitive to the fees charged by an advisor. More than 80 percent say fees are a major factor in choosing an advisor, and 53 percent say they find the fees of a professional advisor to be “very expensive.” (In general, affluent investors prefer paying advisors flat fees as opposed to commissions.)
Nearly one-fourth (23 percent) believes they can do a better job of investing than a professional, and the share jumps to 44 percent of self-directed investors.
More than 30 percent of Main Street investors report having had a bad experience with an advisor in the past. They say they would leave an advisor for not returning phone calls or emails quickly, not providing good ideas and advice, not being proactive in making contact and long-term losses. The results indicate that Main Street investors would like some of the personalized attention that appears reserved for high net worth investors.
Source: http://www.millionairecorner.com/article/why-dont-main-street-investors-use-advisors
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