Understanding Shareholders' Use of Information and Advisers (pdf)

Respondents Who Do Not Consultan AdviserRespondents who had never consulted a professionalfinancial adviser when making investment decisions represented41 percent of all survey participants. The typicalrespondent who had not consulted a professional financialadviser was 42 years old at the time of the survey, had householdincome of $55,000 and household financial assets of$63,000, the excluding primary residence and holdings inemployer-sponsored retirement plans. Almost two thirds ofrespondents who had never used an adviser were male and30 percent had a graduate degree. The majority of respondentswithout a professional financial adviser said they enjoyinvesting and generally spend three hours per monthon financial matters (Figure 9).Respondents who had not consulted an adviser typicallyhad 46 percent of their household financial assets, or $29,000,invested in mutual funds at the time of the survey. Respondentswho had never used an adviser tended to be experiencedfund investors. The median length of fund ownership forthese shareholders was six years, and the median number offunds owned by this group was six. Altogether, 91 percentof respondents who had never consulted an adviser ownedstock funds at the time of the survey, 46 percent owned bondfunds, and 47 percent owned money market funds(Figure 10).CHARACTERISTICS OF THESHAREHOLDER/ADVISER RELATIONSHIPThe nature of the shareholder/adviser relationship differs bytype of primary professional financial adviser. The vast majorityof respondents who indicated either a full-service broker,financial planner, or insurance agent as their primary professionalfinancial adviser described the relationship as a collaborativeeffort. Among respondents listing a bank representativeas their primary professional financial adviser, 50 percentreported that they effectively delegate all fund purchase decisionsto the bank representative, 42 percent described theFIGURE 11Nature of Relationship with Primary Professional Financial Adviser(percent of respondents who had consulted a professional financial adviser)All RespondentsPrimary Professional Financial AdviserWho Had Consulteda Professional Full-service Financial Bank InsuranceFinancial Adviser Broker Planner Representative AgentProfessional financial adviser....Selects all mutual fund 13 8 18 50* 6investmentsRecommends several funds 74 80 77 42* 93and shareholder selects onein which to investPlaces purchase orders for 13 12 5 8 1funds selected solely bythe shareholderNumber of respondents 564 230 188 14 1 30 11Small sample size.* Respondents who use a bank representative as their primary financial adviser are statistically different from those using a full-service broker,financial planner, or insurance agent at the 95 percent confidence level.14