Investing Is Not a “One Emotion” Sport

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Pre-retirees Express Uncertainty and Hope in Q2 2018

Most parents can attest that raising children is not a “one emotion” sport. The anticipation and joy of witnessing a child reach a milestone like starting kindergarten is often combined with feelings of sadness over the completion the toddler years. The same phenomenon occurs with investing. More often than not, investors report a mix of sometimes conflicting emotions

Global consternation over trade between the US and China coupled with tensions between the US and Russia caused a bumpy start to the second quarter of 2018, instilling feelings of uncertainty and anxiety among affluent investors. Sentiment shifted more toward hope and optimism in May with positive news about the lowest unemployment rate in 18 years and strong Q1 earnings. However, news of the Federal Reserve raising rates and the pace of US GDP growth being the slowest since 2013 overshadowed a more than 3% gain from the S&P 500 for the quarter, to which investors reacted with a mix of uncertainty and hope.

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Comparing investors on either side of one of the most major life milestones, retirement, we saw clear differences in sentiment. In Q2 of 2018, investors who are five years or closer to retirement were significantly more likely to express feelings of uncertainty versus their retiree counterparts. Yet nearly as many pre-retirees cited feeling optimistic, similar to their retired counterparts. At the end of the quarter, retirees reported uncertainty as their lead sentiment and significantly more expressed fear compared to pre-retirees. Conversely, investors with retirement in the near horizon were as likely to express uncertainty as they were hope in June.

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The second quarter of 2018 was filled with economic and market driven events providing plenty of activity for investors to absorb. For both pre-retirees and retirees, levels of uncertainty grew (albeit at different paces), as announcements of changes in key indicators and rates were made.

How can distributors and product providers be effective in their response to investors nearing and in retirement? A good first step is to acknowledge the uncertainty expressed by pre-retirees and retirees. An even better move is to proactively remind investors of the factors in their control with respect to managing their assets and remind them that now is not the time to ignore their portfolios. Distributors and product providers that take the initiative by offering pre-retirees and retirees support, guidance and context along with solid retirement income solutions have the greatest potential for strengthening investor relationships during these uncertain times.

We’ll be reporting on investor sentiment quarterly as we’re interested to see how changing market dynamics affect affluent investors’ attitudes and investing behaviors. To get the first look at these data, subscribe to our newsletter, Cogent Thoughts, or check out our Tracking Affluent Investor Sentiment page here.

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Julia Johnston-Ketterer

About Julia Johnston-Ketterer

Julia Johnston-Ketterer is a senior director in the Syndicated Research division. She has more than 15 years of experience leading research initiatives on the client- and supply-sides of the financial services industry focusing on investors, advisors and broker-dealers. Prior to joining Market Strategies, Julia was vice president of business development for Market Probe, Inc. and research associate for Richard Day Research, where she managed financial services clients and conducted client satisfaction studies and PR research programs. Julia also spent ten years at Fidelity Investments. While there, she built a research team that provided primary and secondary research to internal marketing and communications partners. Julia earned an MBA in finance and communications from Simmons School of Management and a bachelor’s degree in French and international relations from the University of Wisconsin-Madison. While she can claim having twice bungee-jumped in New Zealand, Julia’s current adventures outside of work include being a hockey mom, taking hikes with her dog and planning her next family beach vacation.

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