President's Letter: Health or Wealth


The pandemic and the shutdown of the economy have caused investors of all levels of wealth to reassess their financial situation while at the same time ensuring their families stay healthy and out of harm’s way. It’s very difficult to weigh the importance of one over the other. And as small business owners across the country push for the ability to open up, it is often perceived that they care more about wealth than health. This week, however, 600 doctors wrote to President Trump and reminded him that the mental health of many individuals can also cause a crisis. Stories are beginning to emerge about small business owners committing suicide due to the failure of their family business. So what is important to investors? Do they believe wealth is more important than health?

The answer is that health and wealth are equally important to investors. Spectrem’s recent research The Corona Crash: What Advisors Should be Saying to Investors Now* found that as of May 2020, 51 percent of investors with a net worth of $100,000 to $25 million had lost a significant or fair amount of their net worth in the last two months. The good news is that this is lower than in April when 62 percent of investors indicated they had lost a significant or fair amount of their net worth. With such a large percentage of investors losing money, it would seem that the loss of their wealth would be the most important.

But, of course, that is not so. Americans value their families, and thus the health of their families, as equally or more important.

Spectrem asked investors to rate on a 0-100 scale (with 0 being “not concerned” and 100 being “Very concerned”) their level of concern regarding their health and the health of their family in regards to the coronavirus crisis. They were then separately asked to rate their level of concern regarding their wealth and financial well-being in regards to the impact of the coronavirus. The levels of concern were very similar with the level of concern over health being rated at 66.62 and the level of concern regarding financial well-being rated at 65.64. As you can see below, answers varied based upon age, political affiliation and gender.

Not surprisingly, older individuals were more likely to be concerned about health issues than younger investors. Democrats were more concerned about both health and wealth issues than other political affiliations. Interestingly, women were much more concerned about finances than men.

Why is this important to financial advisors? Although investors are very concerned about health issues, their fears about their finances are just as great. This means financial advisors need to be reaching out to their clients on a regular basis to help guide them through the next few months...which will hopefully see a recovery. Dependent on the needs of an individual household, financial plans may need to be re-evaluated. What happened to the college savings? The retirement accounts? Other investments?

If we are all lucky, the health concerns may begin to dissipate, but it may take much longer for the financial fears to be overcome.