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Survey: Investors Say They Still Feel the Influence of the 2008–09 Great Recession

Fewer than half of investors say they are “more confident” about their ability to save for retirement than they were 10 years ago.

The Great Recession’s Legacy

March 2019 marked the 10-year anniversary of the Dow Jones Industrial Average’s low point, which is when the U.S. began to climb out of the 2008–09 Great Recession. Investors say they still feel the influence of the recession, according to the first quarter 2019 Wells Fargo/Gallup Investor and Retirement Optimism Index survey.  Fewer than half of investors (45 percent) say they feel more confident today about their ability to save for a comfortable retirement than they did during the Great Recession.

Among different age groups, 47 percent of those ages 18–49, 45 percent of those ages 50–64 and 28 percent of those 65 and older are more confident today. In addition, 60 percent predict that over the next 10 years, the U.S. economy will experience another period as bad as the 2008–09 recession.

At the same, 65 percent of investors say they are better at shrugging off market volatility 10 years later; 35 percent say it bothers them just as much as before.

“As we enter year 10 of the economic recovery, not even half of investors feel more confident about their ability to prepare for retirement,” said Wayne Badorf, head of Intermediary Distribution at Wells Fargo Asset Management.  “How do we help people feel more confident? It comes down to good advice, services and solutions from a trusted advisor.”

The survey, which was conducted Feb. 11–17, 2019, queried 1,029 U.S. adults with $10,000 or more invested in stocks, bonds or mutual funds.

Investor Optimism

The survey showed some weakening in investor confidence.

Overall, the Wells Fargo/Gallup Investor and Retirement Optimism Index slipped to 90 in the first quarter, down from 98 in the fourth quarter of 2018.Investors remain generally optimistic, however, about a range of economic conditions and financial expectations:

·        Fifty-one percent say they are either somewhat optimistic or very optimistic that they will achieve their investment targets over the next 12 months, a sentiment that increases when looking further into the future.

·        Sixty-two percent say they are somewhat optimistic or very optimistic about achieving their goals in the next five years.

·        Seventy-five percent say they are highly or somewhat confident they will have enough money to maintain their lifestyle in retirement, up from 72 percent in November and 69 percent in August.

·        Fifty-four percent say they are either somewhat optimistic or very optimistic about economic growth.

·        Fifty-eight percent say they are either somewhat optimistic or very optimistic about the unemployment rate.

Meanwhile, the percentage of investors who say it is a good time to invest in the financial markets (64 percent) is roughly the same as the 67 percent in August 2018 and 68 percent in May 2018. Investors are less upbeat about the performance of the stock market (49 percent are optimistic about its 12-month outlook) and about inflation (31 percent are optimistic).

To achieve their investing targets, investors are more likely to say their main investing goal is to maximize growth (61 percent) than to protect from major losses (39 percent).

Majority of Investors Favor ‘the Human Touch’ Over Technology When Seeking Financial Advice

Despite increasing automation in nearly all aspects of the consumer experience, 84 percent of investors say that financial advisors will always be needed and will not be replaced by automated investing technology, according to the survey.

Investors expressed an openness to technology playing a role in their financial planning — just not at the expense of working with an advisor. Only 24 percent say they currently use automated investing technology for their own investing, without the assistance of an advisor. But 56 percent say they would prefer working with a financial advisor who uses automated investing tools on their behalf.

Investors also say they want to communicate with their advisor on a regular basis — on average, three times a year. When asked how they want to communicate, the majority of investors (63 percent) say they prefer a personal connection, including in-person meetings (39 percent), phone calls (22 percent) or video calls (2 percent). Just 20 percent say they prefer to connect through internet chat, and only 18 percent say they want to review their investments on their own, without help from an advisor.

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