The investment market in America is remarkably fluid. Some factors that influence investment decisions can improve or suffer setbacks on a daily basis, while others can charge dramatically due to influences such as new government regulations or unforeseen events.
Some investors have portfolios dominated by low-risk products which do not feel the effects of market fluctuations. Others, however, have portfolios for which a day’s series of events can turn net worth in one direction or the other by large figures.
Investors with fluid portfolios are likely to be the sort who pay attention to daily events through newspapers, cable financial news programs, websites, blogs and podcasts. But a major headache for advisors is keeping track of what investors are thinking, and separating the impressions of Millionaires with the impressions of investors who are not yet worth a million dollars.
That’s where Spectrem’s confidence indices come in.
The Spectrem Millionaire Investor Confidence Index (SMICI) and the Spectrem Affluent Investor Confidence Index (SAICI) tracks changes in investment sentiment among affluent and wealthy households in America. The SAICI tracks investors with $500,000 of investable assets while the SMICI tracks Millionaires.
The value of the Spectrem Indices is that they are nearly immediate. Unlike some research that lets you know how investors responded over the last quarter, Spectrem’s tools measure responses from less than two weeks prior to the release of the information. This is about as immediate as information can be among affluent investors.
There are two ingredients most often noted as the reasons for successful investor-advisor relationships. One is communication and the other is understanding. Investors prefer to have advisors who understand their attitudes, beliefs and concerns. The Spectrem indices directly respond to that type of information.
As part of the index research, investors are asked about their investment intentions, with an eye toward whether they plan to sit back and watch with a cautious eye, or whether they plan to invest more than they did in the previous month. The extra value of the monthly indices is that true trends can be seen as confidence grows or wanes among affluent investors.
As an example, the SMICI showed that in April a larger percentage of Millionaire investors said they planned to re-engage with the market. The largest growth was in intentions to invest in stock mutual funds. The value of this information is obvious to advisors due to its immediacy, and should send a signal to advisors to make sure to contact investors to see if they are in the mood to increase their investment involvement.
The index survey includes questions asking investors what outside influences are impacting their investment decisions. The April index showed that more Millionaires (33 percent) indicated that “stock market conditions’’ impacted their investment decisions. Other choices in April (the choices change to reflect the current conditions) were “retirement”, “economic environment”, “political environment” and “household income”.
The information not only tells advisors what outside influences are currently affecting investments but also what political or social events investors pay attention to.
It is certainly possible for providers to ask these same questions of their own clientele, and that would provide a focused understanding of the factors that are affecting the investment environment. There is simply no such thing as “too much information” when it comes to relating to affluent investors.