President's Blog - Discovering the Unexpected


Every once in a while, you will read or hear a fact that surprises or shocks you.

That was certainly the case when I first found out that hot water freezes faster than cold water. Talk about “counter-intuitive”.

There are unusual facts we are told or discover on our own as we go through life. They are indeed “fun facts’’ and we tend to repeat them when it seems appropriate because if they surprise you, they might surprise friends and family.

When Spectrem does research on affluent investors, we are usually aiming at trends in investment decisions. We want to see if investors are saving more than they did the previous year, are they investing more in mutual funds that in times past, are women more likely to invest in alternatives than men, how does age affect investment decisions?

But occasionally we come upon a research fact that is unexpected. In those cases, we highlight them, because they are likely to be unexpected by advisors as well.

We survey investors all of the time about their plans for retirement, with an eye toward their financial preparations. We just completed a study called Financial Wellness in Retirement, in which we look at an investor’s life before retirement, their life in retirement and their finances in retirement. It’s no shock to find out that affluent investors in retirement are enjoying themselves a great deal.

But when we survey investors who are not yet retired, we find that retirement is not the end all-be all for all investors. According to our latest wealth segmentation series study - Asset Allocation, Portfolios and Primary Providers – 6 percent of investors with a net worth over $5 million to $25 million have no intentions of ever retiring. And based on their wealth level, these are people who can retire, easily. 

Our study on the most affluent investors - The Wealthiest Americans, $25 Million Plus Investors - found that 58 percent of those investors are still working and 20 percent never plan to retire. What are they thinking?

For many Americans, one of their first grown-up purchases is life insurance. They may buy it through their employee benefits program, but having life insurance seems like such a good idea for investors with a family, and it really does seem like one of those steps to adulthood, looking ahead to a time when you may not be around to support your family.

Guess what? A significant percentage of affluent investors don’t own life insurance, either term or whole life. Among those Ultra High Net Worth investors previously mentioned, only 57 percent have life insurance. Perhaps their net worth makes life insurance seem unnecessary, but only 58 percent of Millionaire investors with a net worth between $1 million and $5 million own life insurance. They can afford it, it has benefits and a notable rate of return, and yet they do not purchase it.

Go figure.

We ask questions about expenditures, and we find out that, unlike the popular depiction of wealthy Americans with great treasure troves of collections, few investors play that game. Among the UHNW investors, only 19 percent invest in collectibles, and those that do tend to collect art or currency, and not so much automobiles or libraries of antique books.

We just recently completed a study on 529 College Savings Plans, and found that only 20 percent of affluent investors have taken advantage of that tax-free investment product. The IRS code was specifically written for Americans to have a cost-effective way to invest funds to pay for college, and few Americans take advantage.

Our research is always thought-provoking. That’s why we do it, to find out what we don’t know about America’s affluent investors.

What don’t you know about investors that might be of value to you?