Benefits September 5, 2007

FRC Finds Investor Solutions Desire Tied to Assets Invested

September 5, 2007 (PLANSPONSOR.com) - Findings from a new research study from Financial Research Corporation (FRC) show the greater the percentage of assets investors have invested the more likely they are to adopt the new solution-oriented products and services emerging from investment product providers and financial advisory firms.
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FRC said in an announcement, according to the study, Evolution of the Solution: Investor Perceptions of Solution-Oriented Products & Services, the larger the percentage of total investment assets held in employer-sponsored retirement plans, the more interested participants are in options such as lifecycle funds. Likewise, those with larger percentages of assets held in personal accounts, including IRAs and taxable investment accounts, are more likely to use the services of an adviser.

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The research also found investors are most likely to be motivated to seek information about investment products and services by a desire to become more knowledgeable about their finances, the announcement said. However, the youngest investors (30-40) were the more likely to be motivated by fear or anxiety about their financial futures and the oldest investors (70+) were the most likely to be motivated by a sense of opportunity.

Additional findings of the research included:

  • A growing portion of investors are seeing the value in investment solutions created at the firm level. Greater than one-half of surveyed investors responded that model portfolios or short-lists of pre-researched investments created by manager research teams at financial advisory firms would result in the optimal portfolio, versus financial advisers choosing from all available options.
  • Views about the most important roles of advisers are changing. Just over one-half of investors (52%) thought that the relationship management skills of an adviser, such as the ability to assess investment goals or risk tolerance, were most important, while 48% thought that investment skills, such as the ability to identify strong-performing products or adjust portfolios to changing market conditions, were most important.

The study identifies factors that drive investors to take action by asking their preferences for investment products and services, versus how they feel about existing products and services. Investor preferences are analyzed by demographic characteristics, including age and wealth level, as well as behavioral factors, such as purchasing methods.

For more information, go to www.frcnet.com .

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