Strong Push for Self-Directed Investing

A look at the “anxious male” investor segment reveals they are increasingly more self-directed, going from 62% self-directed in 2010 to 78% in 2015, according to new Hearts & Wallets research.

The findings are drawn from the Hearts & Wallets Investor Quantitative (IQ) Database, says Laura Varas, CEO and founder of Hearts & Wallets. She explains that the firm decided to do a deep dive into male investor behaviors in order to “move beyond gross generalizations” and to do more effective segmentation and analysis of this large and diverse group of investors.

The research effort quickly led the firm to identify a group of potentially vulnerable “anxious male” investors. On average the group is not necessarily bad-off financially. In fact, as Varas explains, her firm has identified a “design persona” of an average male investor “who is anxious, self-directed and has $250,000 or more in investable assets.”

Crunching the numbers reveals this investor segment “often self-directs because of fee-aversion.” Varas notes that in stressful times, “self-reliance has become more appealing.” Digging deeper into the drivers of this effect, Hearts & Wallets finds anxious consumers “to be more likely to have a higher number and more sporadic relationships with financial advisers and online tools and resources than more confident investors.” 

“Anxious investors are slightly promiscuous, searching for an elusive fit, meaning lack of resources is both a cause and an effect of their anxiety,” Varas says. “This indicates a marketing opportunity to help break the cycle for this segment of male investors.” 

NEXT: Adviser opportunity among the anxious 

Only 30% of this segment “enjoys thinking about money,” Varas notes, but interestingly, “the anxious male is not risk averse. He is more concerned about missing out on investment growth than losing money in the short term.”

In fact, 60% in this segment agrees “missing out” is a bigger worry, of whom half (30% overall) strongly agree. In contrast, one in four confident self-directed males strongly agree that “losing money in the short term” is a bigger worry.

More than half (58%) of the anxious male segment “sees value in professional advice,” according to Hearts & Wallets. While some aspects of the group’s behavior are easily anticipated, others are a little harder to interpret. For example, a “stunningly high portion” of anxious males (61%) compared to other design personas developed by Hearts & Wallets is comfortable leaving money in a retirement plan sponsored by a company where they no longer work.

Varas concludes that the financial services industry “must develop well-defined segments and design personas to meet the needs of its customers—anxious males and others—to stay competitive.”

For more information about the firm’s research, visit www.heartsandwallets.com.