Affluent Investors Divided on How Trump Will Affect Their Portfolios, Personal Capital and ORC Report Finds

PR Newswire

SILICON VALLEY, Calif., Dec. 13, 2017 /PRNewswire/ -- Affluent investors are optimistic that markets will continue to climb in 2018, but are sharply divided by gender, geography and generation on how President Trump and the Congressional majority will affect their finances. They're also nervous that they aren't prepared for financial challenges, and over half (51%) are concerned about their financial security in retirement, finds a new report by leading digital wealth manager Personal Capital.

According to Personal Capital's Affluent Investor Outlook Report, which surveyed 1,000 U.S. adults with $500,000 or more in investable assets in cooperation with ORC International, nearly half (48%) of affluent investors believe the stock market will perform better in 2018 than it has in 2017. At the same time, when asked to describe concerns about their financial life, 42% are fearful that their portfolio can't withstand a market downturn and 38% are worried that they will lose their wealth.

Compounding this uncertainty are sharp gender and generational divides among investors on how the political environment will affect their finances. Men are 13 percentage points more likely than women to believe President Trump's policies will have a positive effect on the market (55% vs. 42%). The divide goes beyond Trump: Women (57%) are more likely than men (44%) to say a Democrat-controlled Congress in 2018 would have a more positive impact on their finances. This is also the case among Millennials (56%) and Gen X (58%) versus Baby Boomers (43%) and the Silent Generation (38%).

"The thrill of the market's recent performance can blunt reality – periodic market downturns are inevitable. It's not a question of if, but when, so it's critical to be prepared," says Michelle Brownstein, Vice President of Private Client Services at Personal Capital. "A disciplined approach to diversification can reduce your risk, steady your returns and help preserve your retirement savings in a downturn."

Indeed, the report found that many affluent investors may not be diversified enough. 16% of affluent investors - and 25% of millennial investors specifically - hold most of their net worth in cash. This has the potential to generate negative net real returns on an ongoing basis, without the opportunity to participate in the upside of a recovery. In contrast, affluent Personal Capital users have sophisticated tools that give them visibility into their portfolios. Because of this, only 4% of them hold the majority of their assets in cash.

"When taking inflation into account, holding too much cash is like manufacturing your own market downturn," adds Brownstein. "Many investors incorrectly believe they are automatically diversified if they hold index ETFs and mutual funds, and as a result their portfolio is in danger."

Additional findings from the report include:

Affluent investors see the market, and their own income, growing in 2018

Nearly half (48%) of respondents believe the stock market will perform better in 2018 than it has in 2017. Nearly three in five (59%) respondents expect their gross income to increase in 2018.
With growing income expectations, affluent investors are also giving to charity – nearly all (97%) respondents have already given to charity in 2017 or plan to give before the end of the year.
Forty-seven percent of millennials say they have given or will give $20,000 or more in 2017, versus 22% of Gen X, 4% of Baby Boomers, and 4% of the Silent Generation.

However, affluent investors are still deeply concerned about their financial well-being – and with good reason

Affluent investors' most prevalent concerns are financial security in retirement (51%), that they have not properly tax-optimized their portfolio (46%) and that their portfolio can't withstand a market downturn (42%).
60% of affluent investors—including 87% of Millennials—admitted to making financial mistakes in 2017, such as not saving enough, paying too much for luxury items, and paying too much in investment fees.

Despite the uncertainty, affluent investors are proactively setting their top financial goals for 2018

24% plan to tax-optimize their investment strategy
19% set a goal of "getting ready for retirement"
15% set a goal of "getting a handle on financial life"

Personal Capital's state-of-the-art personal finance tools enable real-time financial visibility and management for over 1.5 million registered users. The firm manages more than $5.5 billion in assets on behalf of its clients and tracks over $400 billion for registered users.

To download the full report, which includes age, gender and regional differences throughout the U.S., affluent investors' outlook on 2018, their financial pictures, and their deepest financial fears (along with practical tips on how to address them), among a wide range of other findings, click here.

About Personal Capital

Personal Capital is the smart way to track and manage your financial life. Personal Capital combines award-winning online financial tools that provide unprecedented transparency into your finances with personal attention from registered financial advisors. The result is a complete transformation in the way you understand, manage and grow your net worth. For more information and to open an account, visit https://www.personalcapital.com/.

Methodology

Personal Capital's Affluent Investor Outlook Report presents the findings of an online study, conducted by ORC International, among a sample of 1,000 respondents ages 18 or older and have total household investable assets of $500,000 or more, excluding their primary residence and employee-sponsored retirement accounts. The report was fielded from November 17-27, 2017.

CONTACT: Katlyn Catubig, 212-279-3115 x291, [email protected]

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