Half of Mass Affluent investors expect their financial situation will be better one year from now than at present, our 2016 research finds. This is a more optimistic forecast than that of Millionaire and Ultra High Net Worth investors, only just over four-in-ten of whom share this outlook.
What do Mass Affluent investors with a net worth between $100,000 and $1 million (not including primary residence) anticipate will provide a significant “boost” to their current wealth position? Financial Behaviors and the Investor’s Mindset: Mass Affluent Investors 2016 finds that the largest percentage (54 percent) expect they will be seeing better returns in the future from their investments.
While Mass Affluent investors are less likely than Millionaire and UHNW investors to consult in some capacity with a financial advisor, their expectations on what will improve their current wealth position represent an opportunity for advisors to provide them with assistance that will maximize those expected boosts, particularly when it comes to investments.
Analyzed by age and wealth level, we find that the oldest (Baby Boomers and World War II generation investors) and wealthiest segments of Mass Affluent investors (with a net worth between $750,000 and $999,999) are the most likely of their cohorts to expect better future returns from their investments (roughly 60 percent).
These investors are more likely to work with an advisor than their younger, less wealthy counterparts, who may not think they have enough assets. To help obtain those expected boosts from their investments, advisors need to get a full sense of the investor’s investment mindset and risk tolerance. Do they enjoy investing? How hands on do they want to be with their investments? Do they want a guaranteed return on the bulk of their investments and what percentage are they willing to put at risk?
After investments, nearly four-in-ten Mass Affluent investors (38 percent) expect a boost in their current wealth position from more stringent budgeting to cut down on current spending. Baby Boomers, again, are slightly more likely than their younger counterparts to expect this boost from their investments as are 35 percent of the wealthiest investors in this wealth segment (second to those with between $100,000 and $499,999).
Advisors need to determine whether these investors have a financial plan in place and whether they are following it. In-depth money talks best define goals and expectations for a secure financial future. In addition to in-person meetings, education and information provided on-line through blogs or articles can also provide invaluable advice and insights regarding financial planning and budgeting,
In providing this and other information that is specific to an investor’s needs, financial advisors can open the door for a potential boost in advisor usage.