Wells Fargo Private Bank survey finds only 13% of investors adjusting retirement goals
for greater growth as life expectancy increases
Five years after the S&P 500’s lowest point of the Great Recession, a third of investors still remain skeptical about putting their money in the
stock market, according to a TNS survey commissioned by Wells Fargo Private Bank. But more than half of those surveyed (55%) said they would not react any differently in another
bear market. Only slightly more than a quarter (28%) said they made major changes to their
“Since March 9, 2009, the S&P 500’s total return has gained more than 200%, and for
those who sat out, they missed a great opportunity,” said Dean Junkans, chief investment
officer for Wells Fargo Private Bank. “On the other end of the spectrum, we are seeing
some irrational complacency with the bull run. Some investors are unaware of interest rate
risks and have not adjusted to how they go about investing.”
A major challenge for investors is that they may not have adequately adjusted their
investment portfolios to address longer life expectancies and the increased time horizon
they will need for their retirement, said Junkans.
“Only 13% of those surveyed said longer life spans have caused them to be more
aggressive, while 87% are either more conservative or have not made any changes.
Investors need to gain a better understanding of their future needs,” Junkans said. “Despite
the market reaching record highs this year, 21 % of the survey respondents who remain
wary of the market said nothing would get them to add more stocks to their portfolio.”
TNS conducted the survey of more than 500 affluent investors ($500,000+ in investable
assets) February 6 – 12, 2014, to understand investor sentiment in the current
environment, investor thoughts on the bear market from 2008 to 2009, and how they may
have changed their investment strategy.
According to Junkans, the survey results give great insight into how much more investors need to learn about wealth planning, as well as the importance of identifying goals and sticking to them.
“Investors’ confidence needs to be rooted in a conviction that they’re taking appropriate risks to meet their long-term goals. Without that conviction, emotional investing and reacting to the daily news are a road to failure,” said Junkans.
What Investors Said They Believe and Where They Get Their Information
When looking at respondents’ overall knowledge of investing, survey results show that 41% of investors believe reducing the federal bond-buying program will result in increased interest rates. The same percentage (41%) of investors does not know which would create a bigger loss to their portfolio: a 10% loss in the stock market or a 1% increase in long-term rates.
Half (50%) of the investors said their primary source of investment information is their advisor, with 25% citing the financial media, 17% their investment plan, and 8% their gut instinct.
Lessons Learned from the Bear Market of 2008-2009
Among the most significant lessons investors said they learned are to: stay disciplined (34%), be diversified (30%), avoid action on emotions (18%) and use a professional to help with investments (17%). Retirees were more likely to say they learned to use a professional (23%), while non-retirees were more likely to have learned to stay disciplined (41%).
One-third of respondents said the 2008-2009 financial crisis is still a factor in how much stock they are willing to own. Of those who remain wary of the markets, one in five (21%) don’t plan to invest in stocks, while factors that may make them reconsider investing in stocks include sustained positive returns (36%), advisor recommendation (33%), reduction in political dysfunction (33%), or a pullback in the market (23%).
How Investors Are Making Decisions
For nearly half of respondents, the most important factor in making investment decisions is risk tolerance (47%). About one in five said the most important factor is income needs (20%), followed by time horizon (19%), and need for growth (14%).
Expectations investors had about the role of their advisor included 29% who expect help in keeping them disciplined to their plan, 27% who expect frequent communications about their investments, and 16% who expect education on investing principals.
About Wells Fargo & Company (Twitter @WellsFargo) Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.5 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 locations, 12,000 ATMs, and the internet (wellsfargo.com), and has offices in 36 countries to support customers who conduct business in the global economy. With more than 264,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2013 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at blogs.wellsfargo.com.
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