- Non-retirees bullish on investment technology, financial advice,
but worried about having enough in retirement
- Eight in 10 say "American Dream" is "Achievable"
- Majority of investors not knowledgeable about market gains
ST. LOUIS--(BUSINESS WIRE)--
The Wells Fargo/Gallup Investor and Retirement Optimism Index slipped
eight points in the second quarter to +29 from +37 in February, driven
largely by a 17-point decline (from +41 to +24) in optimism among
retired investors, whose view of inflation and economic
growth deteriorated during the quarter.
The optimism of non-retirees remained essentially unchanged, at +31,
versus +35 in February, according to the quarterly survey of 1,036
investors, aged 18 and older conducted June 27 through July 9, 2014.
Despite having ambivalence about the economy and investing, 84% of the
investors surveyed said the American Dream is achievable. Their
definition of the dream included the ability to afford a home (93%),
living comfortably in retirement
(92%) and having meaningful
employment (92%). Least cited: having a standard of living
surpassing that of their parents (76%).
Nearly nine out of 10 non-retired investors said they are optimistic
they will achieve the American Dream versus 77% of retired investors,
reflecting the overall optimism of non-retirees in the survey.
"The American Dream remains a pretty simple concept among investors: a
home, a good job, and money to live on later in life," said Joe Nadreau,
head of Innovation and Strategy at Wells Fargo Advisors. "While
retirement gives some investors pause, most still view the American
Dream optimistically and are taking steps to realize it."
Having Enough Money in Retirement Still a Concern
Though most saw a secure retirement as fundamental to realizing the
American Dream, about half of the non-retired investors in the survey
(47%) were either "extremely" or "somewhat" worried that they have not
saved enough to be able to retire. About a third, (29%) were a "little
worried," while 24% were "not worried at all."
Similarly, 46% of all investors - retired and non-retired - were worried
they won't have enough money to last throughout their retirement. This
includes 19% who were "extremely worried." By contrast, 20% were "a
little worried," and 29% were "not worried."
"About half of investors worry about whether they'll be able to retire,
and if they do, whether they've saved enough to last through
retirement," said Nadreau. "Regardless of where they are in their lives
and how much they make, investors can allay these concerns with a clear
Saving and Investing: What Would You Do With $10,000?
When asked what they would do with an extra $10,000 to save or invest,
41% of investors said they would invest
money in the markets, while a majority (56%) said they would keep it
as cash or saved in a CD.
The conservative response tracked with 59% of investors who said the
financial market is a "fair" to "poor" place for average Americans to
grow wealth, despite 2013's historical market gains. This view was more
widely held (69%) among investors with less than $100,000 in investable
Two-thirds of investors (67%) said they are "highly knowledgeable" or
"somewhat knowledgeable" about investing, about the same percentage that
correctly answered that the stock market rose in 2013, when asked
whether the markets increased, decreased, or stayed the same last year.
However, just 7% of investors said they knew the markets had an average
return of 30% in 2013, based on S&P 500 returns. Of those who knew the
market rose in 2013 (37%), the majority thought the market increased
only 10%, while another 17% thought it rose 20%.
"There's a perception gap with investors," Nadreau said. "They said
they're pretty knowledgeable about investing, but they don't seem to be
aware of the market's record growth over the last year and a half."
Investors who put $10,000 in an investment based on the S&P 500 at the
beginning of this year, would have gained $710*, compared to much lesser
returns in non-equity/fixed income investments. "Knowledge truly is
power, and in this case, security when building the American Dream."
(*based on the total return for the S&P 500 Composite Index in first
half of this year, which was 7.2%. In 2013, the S&P 500 Index returned
32.8% including dividends, however these returns do not account for
investor fees and expenses. Investors cannot invest directly in an
Advice Makes a Difference to All Investors - Regardless of Asset Level
While the survey's knowledge findings could raise questions about
investors' abilities to assess risks and opportunities, it also showed
most investors who own stocks were open to professional guidance, be it
in person, on the phone, or collaboratively in the digital space. In
fact, of the eight in 10 investors who reported owning individual stocks
or mutual funds, 71% said they prefer consulting with someone who can
give them expert or professional advice, compared to 27% who said they
feel confident about investing in the market on their own.
Overall, roughly one-third of investors (32%) sought more financial
advice in the last two to three years, and nearly 40% indicate they
would increase the advice they seek in the next two to three years.
Investors overwhelmingly seek advice during major changes in their life.
The top three reasons investors sought financial advice are retirement
(71%), divorce (64%), and death
of a close family member (52%). Only 35% of investors said they
would seek financial advice upon getting married, followed by 34%
seeking advice for changing jobs, and 32% seeking advice when everything
is going well in their lives.
Non-Retirees Much More Confident About Technology
Investors were twice as likely to have a dedicated personal financial
advisor as they were to use an online website (44% versus 20%). This was
particularly the case with retired investors surveyed, who said they
relied more heavily on a dedicated personal financial advisor than on
technology (53% vs. 11% for non-retired investors).
By contrast, 40% of non-retired investors had a personal advisor and 24%
used an online planning or investing website, a much smaller difference
between the two strategies. Separately, the poll found high asset
investors - those with $100,000 or more - were more likely to rely on
advisors and technology, although they still relied much more heavily on
a dedicated personal financial advisor than on technology, 53% vs. 23%.
Meanwhile, just 32% of investors with less than $100,000 in investable
assets had a dedicated personal advisor and 18% used a financial
planning or investing website.
Nevertheless, more than half of U.S. investors (57%) described
themselves as "very" or "somewhat comfortable" using online and mobile
technology for their investing or financial advice needs. Further, 31%
of non-retirees said they expect to use more mobile and online
technology for investment services, in the next few years. This topic
may be worth watching for future indications, as 66% of non-retirees
(compared with just 34% of retirees) said they were "very" or "somewhat"
comfortable using technology in conjunction with their investing or
"Technology is dramatically transforming the way investors - and their
advisors - approach financial planning," said Nadreau. "That the
fastest-growing group of investors - non-retirees - is showing more
signs of openness to technology is a strong indicator for the future of
FOOTNOTE: For historical context, the overall index continues to
register in the range of +25 to +43 seen since the start of 2013.By
contrast, since its inception in 1996, the Investor Optimism Index has
reached as high as +178 (in early 2000) and as low as -64 (in early
2009). Both groups, but especially retirees, are also broadly optimistic
about the stock market, while they take a negative stance on
unemployment and inflation.
About the Wells Fargo/Gallup Investor and Retirement Optimism Index
These findings are part of the Wells Fargo/Gallup Investor and
Retirement Optimism Index, which was conducted June 27-July 9, 2014, by
telephone. The sampling for the Index included 1,036 investors randomly
selected from across the country with a margin of sampling error is +/-
three percentage points. For this study, the American investor is
defined as any person who is head of a household or a spouse in any
household with total savings and investments of $10,000 or more. About
two in five American households have at least $10,000 in savings and
investments. The sample size is comprised of 71% non-retired and 29%
retirees. Of total respondents, 61% had reported annual income of less
than $90,000 and 39% of $90,000 or more. The Wells Fargo/Gallup Investor
and Retirement Index is an enhanced version of Gallup's Index of
Investor Optimism that provides its historical data. The median age of
the non-retired investor is 46 and the retiree is 68.
The Index had a baseline score of 124 when it was established in October
1996. It peaked at 178 in January 2000, at the height of the dot-com
boom, and hit a low of negative 64 in February 2009.
About Wells Fargo Advisors
With $1.4 trillion in client assets as of June 30, 2014, Wells Fargo
Advisors provides investment advice and guidance to clients through
15,189 full-service financial advisors and 3,472 licensed bankers. This
vast network of advisors, one of the nation's largest, serves investors
through locations in all 50 states and the District of Columbia. Wells
Fargo Advisors is the trade name used by two separate registered
broker-dealers and non-bank affiliates of Wells Fargo & Company: Wells
Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC
(members SIPC). Statistics include other broker-dealers of Wells Fargo &
Investment products and services are offered through Wells Fargo
About Wells Fargo & Company (Twitter @WellsFargo)
Wells Fargo & Company (NYSE:WFC) is a nationwide, diversified,
community-based financial services company with $1.6 trillion in assets.
Founded in 1852 and headquartered in San Francisco, Wells Fargo provides
banking, insurance, investments, mortgage, and consumer and commercial
finance through more than 9,000 locations, 12,500 ATMs, and the internet
(wellsfargo.com), and has offices in 36 countries to support customers
who conduct business in the global economy. With approximately 265,000
team members, Wells Fargo serves one in three households in the United
States. Wells Fargo & Company was ranked No. 29 on Fortune's 2014
rankings of America's largest corporations. Wells Fargo's vision is to
satisfy all our customers' financial needs and help them succeed
financially. Wells Fargo perspectives are also available at Wells
Fargo Blogs and Wells
For more than 70 years, Gallup has been a recognized leader in the
measurement and analysis of people's attitudes, opinions, and behavior.
While best known for the Gallup Poll, founded in 1935, Gallup's current
activities consist largely of providing marketing and management
research, advisory services and education to the world's largest
corporations and institutions.
Note: Complete survey results and a chart showing the
index movement are available upon request.
Source: Wells Fargo & Company