The stock market may have come all the way back to its pre-financial crisis heights, but five years later pre-retirees and retirees haven’t forgotten what they experienced. That was Spectrem Group CEO George Walper’s message to attendees at the fourth annual Innovative Retirement Strategies conference produced by Financial Advisor and Private Wealthmagazines in Orlando on March 13.
Most of the investing public remains conservatively positioned, even though they say their attitude towards risk is moderate. With the strong rebound in equities, Walper said that “many say they want to get a little more aggressive.”
Looking at the far ends of the wealth spectrum, many of the folks at the bottom and the top have largely recovered their net worth. The number of households with $1 million or more jumped 400,000 to 8.99 million in 2012, acccording to Spectrem’s most recent survey.
But one market segment, the mass affluent, has failed to rebound, Walper said. This group, with between $500,000 and $1 million in investable assets, represents a large subset of the U.S. population.
This is the group with the highest percentage of their money in cash. Many of them went to cash during the financial crisis and never got back into the markets, Walper argued.
The largest percentage of wealthy investors are retired and low interest rates have them worried about income, Walper said. Moreover, the current political climate, which typically matters only around election time, remains a dominant concern.
Wealthy Americans felt better in January after a degree of clarity emerged about what tax rates would be. But Walper said they now feel worse as Congress is talking about more tax increases. Sixty percent of investors surveyed by Spectrem say they think the U.S. economy will have recovered when unemployment reaches 6 percent.
Another change emerging from the Great Recession is that nobody is rushing to retire anymore, Walper said. And while those individuals who use advisors express greater satisfaction than they did in 2009, the level of satisfaction with advisors hasn’t returned to pre-crisis levels.
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