How Age Impacts Participant Outlook


 A positive mental attitude seems to change everything. It boosts a person’s self-worth, motivation and productivity and makes a person more appealing and pleasant to be around.

Some people have a positive mental attitude and others do not. It operates on degrees of positivity, but you know the positive ones in your life as well as the negative ones.

Attitude can impact investing. People with a positive attitude are going to think more optimistically about the possibilities of growth in investments, while negative people are going to imagine the worst and react accordingly.

Spectrem’s new study on investors with defined contribution plans shows that there are differences between DC participants based on age and optimism about current and future financial situations.

“When we do our research, we do not know what we are going to find,’’ said Spectrem president George H. Walper Jr. “The studies on defined contribution participants often shows significant differences in participants based on age, gender and wealth. The questions regarding optimism, which is such a key factor in investing habits and attitudes, indicated real differences in participants based on age.”

The research shows an intriguing spread of responses when participants were asked how their financial situation compares to their situation one year ago. Baby Boomers were the most positive, with 64 percent saying their situation is better, and 61 percent of Millennials agreed about their own financial spot. But only 56 percent of Gen Xers said they were better off, which might be an indication that they are at a stage of life where some important decisions are being considered regarding employment and retirement funds.

Oddly, the same dichotomy of response in reverse shows up when participants were asked if they worry about maintaining their current financial position. Only 50 percent of Gen Xers agreed, while 66 percent of Millennials and 58 percent of Baby Boomers felt that way. Millennials, perhaps, are still in a stage where there is some inconsistency in terms of job security, while Baby Boomers may still be in the job market and some may be concerned about holding on to their current employment positions.

There is general agreement in regards to whether these defined contribution plan participants are wealthy, and the consensus is a little yes and a little no. Asked to place their responses on a 0-to-100 scale, where 100 signified agreement that they were wealthy, Baby Boomers’ average response was 51.75, right in the middle of the range, while Gen Xers were at 49.01 and Millennials were at 48.87, just below the midrange mark.

It is noteworthy that Millennials go against the grain among most investors in Spectrem surveys by saying they have a stronger feeling that their parents and spouse’s parents are wealthy than they have of their own wealth. Usually, investors are more certain of their own wealth level than they are of their parents or in-laws.

Millennials did show optimism in one area regarding the future. Seventy-six percent of Millennials said they believe their children will be better off financially than they are when their children reach the age the investor currently is.  By comparison, only 39 percent of Baby Boomers feel that way, meaning a majority of those older investors believe their children will either be in the same financial position their parents are in when they reach their 50s and 60s, or they will be worse off financially, which is not a good thought.

Top Takeaways for Advisors

For advisors working with investors with defined contribution plans, optimism and pessimism are two of the most powerful emotional characteristics governing investment options. The factors which create optimism or pessimism must be considered with every investor, and it is important for advisors to understand just how outside influences can affect an investor’s attitude one direction or the other.


©2017 Spectrem Group