Affluent Investment Plans: Political Climate Not Making Waves


It’s not that Affluent investors are nonplussed by the presidential campaigns. Fifteen percent surveyed last month by Spectrem Group indicated they consider it the most serious current threat to achieving their household’s financial goals. They said they consider the Economy and Market Conditions to be the most serious current threats. Back in February, Affluent investors said that it was news stories about the political environment that were most affecting their economic outlook.

But when it comes to investment plans, the Political Climate is not having near the impact as Stock Market Conditions, Retirement and the Economic Environment, Affluent investors report.

Three-in-ten said that Stock Market Conditions is the primary factor most affecting their current investment plans. This is down two percentage points from April 2016 when this question was last asked. In late June, U.K. citizens stunned the world by voting “yes” on a referendum to leave the European Union. The vote roiled the markets, but the sell-off was short-lived. Wary affluent investors surveyed by Spectrem Group this month indicated a slightly higher percentage who said they would hold on the investment sidelines in the coming month. While intention to invest in equities dipped, intention to invest in Cash increased 18 percent from June.

In the first week of July, the government’s closely-watch jobs report found a significant surge in hiring over the previous month with the U.S. adding 287,000 new jobs. The average hourly wages are up 2.6 percent for the past year. This encouraging news helped to further calm the market. As of late July, the CBOE Volatility Index was at its lowest level for over a year.

Nineteen percent of Affluent investors said Retirement is the one factor most affecting their investment plans. This is up one percent from last April. Retirement is an ongoing concern in households planning and saving for their financial futures, and what happens with their investments and the economy can directly impact their retirement savings.

Eleven percent cited the Economic Environment is the primary factor most affecting their current investment plans. This, too, is up 1 percent from last April and consistent with surveys dating back to October 2013.

Only 4 percent of Affluent investors said the Political Climate is the one factor most affecting their current investment plans. This is unchanged from last April, but up 2 percentage points from January 2016.

This is consistent with findings from Financial Behaviors and the Investor’s Mindset, Spectrem Group’s wealth segmentation study of wealthy households.  For example, 27 percent of Millionaire investors with a net worth between $1 million and $5 million (not including primary residence) said they would not make major investment and financial decisions until after the election. Of these, analyzed by age, 34 percent were Millennials and 32 percent were World War II generation investors.

An analysis by wealth level finds that of the 27 percent total, the largest percentage (28 percent) were at the upper end of the Millionaire segment (with a net worth between $3 million-4.9 million).

Top Takeaways for Advisors and Providers"

  • In the event of the type of market tumult experienced following the Brexit referendum, advisors need to pro-actively reach out to investors who may be panicked by what they are seeing in the news related to the market.