Mass Affluent Go It Alone

According to the “2013 Mass Affluent Investor,”a Spectrem Group study, even though their net worth is estimated between $100,000 and $1 million, not including a primary residence, a majority of the mass affluent feel they have not built enough wealth to achieve goals like a comfortable retirement. At the same time, people in this economic group tend to be reluctant investors who report a low tolerance for risk.

Mass affluent investors are significantly less likely than millionaires to seek out the counsel of a financial adviser because of perceived risks, yet they could derive great benefits from financial advice, noted George H. Walper Jr., president of Spectrem Group.

This failure to seek advice leaves them vulnerable to running out of money in retirement and falling short of other financial goals. “Considering the mass affluent represent some 28.4 million U.S. households, the problem has broad societal implications,” Walper said.

(Cont’d…)

Highlights from the “2013 Mass Affluent Investor” include:

• Prevailing Pessimism: Fewer than half indicate their finances are in better shape now compared to a year ago and only 46% expect their situation to improve in the coming year.
• Lone Rangers: Roughly one-fourth works regularly with a financial adviser. At the same time, less than one-third wants to be actively involved in the day-to-day management of their finances and a large share say they have little or no investment knowledge.
• Risk Averse: Less than one-third is willing to take significant risk with portion of their investments, and 21% says they regret not investing more conservatively in the years leading up to the financial crisis.
• Retirement: More than 40% are unsure of having sufficient income to live comfortably in retirement, and 40% plans to work past the age of 65. Close to 40% of those younger than 54 say their household is not saving enough.
• Concerns: The mass affluent are primarily worried about maintaining their own financial position, but close to 60% are worried of the financial situation of children and grandchildren, and more than half indicate they are caring for aging parents. The economy, political environment, tax increase, inflation and national debt are also weighing on their confidence.

Additional information and more insights are available at Spectrem’s Millionaire Corner.

Spectrem Group, located in Lake Forest, Illinois, analyzes its ongoing primary research with investors to assist financial providers and advisers in understanding the voice of the investor.