The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Should You Customize Products Based On Investor Experience?  Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, January 11, 2018

Should You Customize Products Based On Investor Experience?

Reported by Kenny He

To counteract the rise of passive indexing and safer alternatives such as ETFs, mutual fund managers need to understand that the problem often isn't the product, but the investors.

According to the Experience Divide, a survey conducted by Hearts & Wallets, inexperienced investors fundamentally have a different mindset from experienced investors and tend to be risk-aversive, so the best solution would be to understand how to approach both inexperienced and experienced investors.

In the survey, only 14 percent of inexperienced investors with more than $2 million of investable assets rated a confidence score nine or higher out of ten. On the other hand, 30 percent of experienced investors rated a confidence level higher than nine. Experienced investors emphasize that the key difference is their willingness to seek out an expert for investment guidance.

The report also partially attributes the difference in attitudes to the misconceptions that inexperienced investors have towards active management, such as a preconceived disadvantage competing with experienced investors.

"Consumers in this research are like canaries in a coal mine, revealing the concerns of the larger body of inexperienced consumers," Laura Varas, CEO and founder of Hearts & Wallets, states. "By understanding the mindsets of inexperienced consumers, higher-priced services, such as active management and advice that is deeper and broader, can identify the best ways to communicate and connect with this market."

In the survey, 44 percent of inexperienced investors strongly agreed with the statement "I'm uncertain what to invest in right now." In comparison, only 22 percent of experienced investors strongly agreed with the statement, which shows that experienced investors are more confident and open-minded to seeking opportunities.

To approach inexperienced investors who have no intention of investing, advisors may look to asset managers for more products that incorporate recognizable brands and safer options could allow advisors to help investors build up experience and confidence levels.

As for approaching experienced investors, Varas suggests that mutual fund firms could create different types of funds depending on investor experience or focus sales on a segmentation of investor types that aligns with the firm's investment style.

Hearts & Wallets, based in Rye, New York, is a data and consulting firm that provides retail investor data. The report surveyed individuals between the ages of 53 and 70 with $500,000 to under $5 million in investable assets.  

Stay ahead of the news ... Sign up for our email alerts now

 Do You Recommend This Story?

Return to Top
 News Archives
2022: Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Add to My Yahoo!
follow us in feedly

  1. 2022 ICI Leadership Summit, May 25-26
  2. ALFI Roadshow to New York, May 25
  3. 2022 IDC Fund Directors Workshop, May 26
  4. Irish Funds Annual Global Funds Conference 2022, May 30-31
  5. WealthManagement Edge, May 31 - June 3
  6. MFDF 2022 Fund Governance and Regulatory Insights Conference, Jun 8-9
  7. 28th annual Expect Miracles East Coast Classic, June 9
  8. 2022 Sohn Investment Conference, June 9
  9. IDC webinar - Cybersecurity for Fund Boards: The Current Landscape, June 9
  10. MMI webinar - Driving Business Value with Artificial Intelligence & Data, June 15
  11. MFDF webinar - Key Takeaways From Morningstar's 2021 Annual Fund Fee Study, June 16
  12. MFDF Director Discussion Series - Open Forum (Chicago), June 21
  13. 2022 MMI Emerging Asset Managers Forum, June 23
  14. MFDF In Focus: Capitol Hill, A Conversation with Congressman Bryan Steil, June 28
  15. Financial Planning INVEST, Jun 28-29
  16. MFDF webinar - Differentiating Mutual-Fund-to-ETF Conversions, July 19
  17. MFDF Director Discussion Series - Open Forum (New York), July 20
  18. 2022 MMI Distribution Leadership Forum, Jul 20-21
  19. MFDF webinar - Fund Boards' Oversight of Investment Performance, July 28
  20. MFDF webinar - Performance, Perception and Manager Selection, September 14
  21. 2022 ICI Tax and Accounting Conference, Sep 18-21
  22. 5th annual Expect Miracles Atlantic Coast Classic, October 3
  23. Nicsa Fearless Leadership Symposium, Oct 6-7
  24. 2022 MMI Annual Conference, Oct 19-21
  25. 2022 IDC Fund Directors Conference, Oct 24-26
  26. 18th annual Expect Miracles Wine & Spirits Event, October 27

©All rights reserved to InvestmentWires, Inc. 1997-2022
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use