The Spectrem Affluent Investor Confidence indices both declined in May for the first time since February. The May Spectrem Millionaire Investor Confidence Index (SMICI®) dropped 6 points to 5, while the Spectrem Affluent Investor Confidence Index (SAICI®) fell 4 points to 0. The indices are down 10 points and 8 points, respectively, from May 2015.
One of the drivers of our Investor Confidence indices is a monthly survey of Affluent investors about how they would invest in the coming month. In May, Affluent investors were most likely to say that they would hold on the investment sidelines. There was also a marked increase in investors who indicated they would invest in Bonds.
Another factor that impacts our indices is the Spectrem Affluent Household Outlook, a monthly measure of long-term (12 months) confidence in four financial factors that impact their daily lives. While the Outlook rose slightly in May, there was a marked decline from April in confidence in the Economy. This was perhaps fueled in part by the April jobs report that was released in the beginning of May. This closely-watched report found that the economy added only 160,000 jobs that month.
“A drop in confidence in the outlook for the Economy and increased concern about the upcoming Presidential election were factors in the decline of our May indices,” Spectrem President George H. Walper, Jr. said. “A more cautious investment mindset last month coupled with a slight rise in the Spectrem Affluent Household Outlook indicates that Affluent investors are more pessimistic about the next month than they are about the next 12 months.
May’s Affluent Investor Confidence indices found marked confidence gaps between genders and political affiliations. The SAICI for men is at 5 ( a decline of 6 pts. from April) compared with -8 for women (a gain of 1 pt.), while the SMICI for men is at 7 (down 4 pts. from April) and at 2 for women (down 2 pts. from the previous month). Similarly, the Spectrem Affluent Household Outlook for men is at 21 (up 2 points from the previous month) and at roughly 13 for women (unchanged).
The SAICI for Affluent investors who identify as Republicans was significantly higher (5) in comparison to respondents who identify as Democrats (-4) and Republicans (-2).
Since 2004, the monthly Spectrem Affluent Investor Confidence indices have tracked changes in investing sentiment among the 16.3MM households in America with more than $500,000 of investable assets (SAICI), and those with $1MM or more (SMICI). Spectrem Group is a market research and consulting firm whose ongoing research focuses on the affluent and retirement markets. This month’s survey was fielded between May 19-25.
Financial advisors can use the findings of the Spectrem Affluent Investor Confidence indices to gauge their clients’ investment mindset and risk tolerance. It is another opportunity to foster a dialogue with clients about what is currently concerning them; a discussion which can be a guide toward investment selection and asset allocation.