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Asset Management / Wealth Management
Connecting with investors early on critical for sustained growth
Study finds huge increase in adviser-reliant and self-directed segments as investors move into their 50s
The Asset 12 May 2022

Many investors reach an inflection point in their 50s and choose between acting as self-directed investors or outsourcing responsibility to an adviser.

For investment advisers, this means connecting with investors before this decision is made is critical for building and sustaining a long-term relationship with clients, Cerulli Associates says in a US retail investor report.

The research and consulting firm classifies investors across the following behavioural advice continuum:

  • Passive investors: "Set it and forget it" investors who are not highly concerned with a need for advice or services.
  • Self-directed: Independent, self-sufficient investors who are highly hands-on with their finances and are not interested in paying for advice.
  • Advice seekers: A hybrid segment of investors who have the DIY (do it yourself) characteristics of the self-directed but are actively looking for more/new advice and insight.
  • Adviser-reliant: Investors who are heavily dependent on the use and involvement of traditional financial professionals, with little self-guided decision making.

In its research, Cerulli identifies a substantial increase in the adviser-reliant and self-directed segments as investors move into their 50s. By age 50, many have had enough experience with their current provider to turn over full control, resulting in a jump in the adviser-reliant category to 37% among those in the 50-59 age bracket, and, subsequently, to 52% among those in their 60s.

Others choose to go their own way, resulting in a jump in the self-directed segment to 17% among those in the 50-59 age bracket, and, subsequently, to 18% among those in their 60s, and 20% among those in their 70s.

“Investors in their 50s are at a crossroads,” says Cerulli director Scott Smith. “These former advice seekers can either turn over control their trusted advisers or use the knowledge they’ve captured over the years to take a more active role in the ongoing management of their portfolios long-term.”

To avoid losing clients, it is important that advisers build relationships with investors earlier on in their investment journey, Cerulli says. Advice seekers peak at 59% between ages 30 and 39, and subsequently drop to 48% between ages 40 and 49, suggesting an opportune time for advisers to create a relationship with these investors.

“These investors want one-on-one help but likely have yet to accumulate the assets to drive suitors to their doors,” says Smith. “It’s imperative to create valued relationships with these investors as they mature into optimal clients.”

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