Does Ukraine Matter to Investors?
When investors are asked to identify their international and national concerns, 73 percent indicate they are worried about the war in Ukraine and 70 percent are concerned about tensions with Russia, but do these concerns impact their investment decisions? For most investors, although they care about Ukraine, they really have not made any changes to their portfolios due to the conflict in Ukraine.
Spectrem Group recently completed research with investors with $100,000 to $25 million of net worth. The research was focused on their attitudes and behaviors regarding issues and challenges currently in the news. While investors currently have many concerns regarding multiple national and international issues, support for Ukraine was very high. However, changes to their portfolios due to the Ukraine war were limited
Most investors (31%) get their news and information regarding Ukraine from the television network news while 22 percent obtain information from cable television news and an additional 22 percent turn to online sources.
Only 14% continue to rely upon newspapers. Not surprisingly, younger investors get their news from online sources while older investors are more likely to turn to the networks and cable news.
The greatest concern that investors have is that the war in Ukraine will escalate and involve other countries (48%). Other concerns involve the rising cost of fuel (17%), further territorial aims from Russia (16%) and stock market volatility in relationship to Ukraine (12%). Most investors support continued economic sanctions but not military involvement (43%) while 31 percent support continued economic sanctions and limited military involvement (31%). Only 13 percent want to greatly increase military involvement while 9% want no involvement at all in the conflict. These feelings are consistent regardless of gender or political affiliation.
Most importantly, 75 percent of investors, have made no changes to their portfolios due to the conflict in Ukraine. Younger investors are more likely to have made changes than older investors.
What does this mean for financial advisors?
- Discuss the impact of the conflict in Ukraine on the stock market. While currently the impact seems relatively small, be sure to identify what types of events might make a change in their investments appropriate.
- Identify other factors that are more relevant to their portfolios than Ukraine. Most investors are currently worried about inflation and stock market volatility. Be sure to discuss these topics with investors.
- Be sensitive to feelings investors may have regarding Ukraine as well as other topics. While it’s difficult to discuss politically charged topics, the Ukrainians have relative strong support across the board. Be aware of the background of investors and any impact that may have on some of their emotions.
- Younger investors may be more likely to want to make a change than older investors. Discuss if any changes are appropriate to their current asset allocation.
The War in Ukraine is just one of many issues over which investors are currently losing sleep. It’simportant to discuss its implications with your clients.