Can recognizing portfolio discrepancies improve broker services?

The decision process of individual investors and their portfolio holdings were examined to see if discrepancies existed in desired versus actual holdings and if such discrepancies could be predicted. A random survey of 94 investors in Canada conducted through brokerage houses in Southwestern Ontario yielded 94 usable replies. Investors classified their current common stock holdings and desired holdings as: 1. dividend income shares, 2. short-term capital appreciation shares, and 3. long-term appreciation shares. Investors ranked current and desired portfolios from high risk to safety. Discrepancy measures then were determined for each group. Step-wise discriminant analysis on the total discrepancy measure identified 3 variables as significant in classifying no discrepancy versus discrepancy. The variables were: 1. investment time, 2. following broker's advice on buying dividend paying securities, and 3. the degree of use of investment counselors. They explained 100% of the sample variance between the 2 groups.