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MacroMonitor Market Trends June 2011

MacroMonitor Market Trends is a newsletter from Consumer Financial Decisions that highlights topical news and trends of interest to you and your colleagues. If you would like more information about the topic in the newsletter or would like to discuss other ways that we can assist you in your research and marketing efforts, please contact us.

Uh-Oh! Interest in Making Investment Decisions Wanes, Even among Households with $5+ Million in Assets

From the market peak of 2000 through postrecession 2010, the proportion of households that prefer to spend as little time as possible in making investment decisions has remained statistically the same or has increased—with one exception: households with total assets between $2 million and $5 million. Currently, somewhat more than half of all US households prefer to spend less time than previously on investment-decision making—an increase of almost 10% of households from the number in 2000. For households with assets of up to $2 million, these data support an overarching preference for broad financial-services disengagement (see the January 2011 MacroMonitor Market Trends Newsletter).

Figure 1: Agree: I Prefer to Spend as Little Time Making Investment Decisions as Possible

The two most interesting populations are those with the most assets. For households with between $2 million and $5 million in assets, interest in spending as little time as possible in making investment decisions increased (11% more in 2008 than in 2000) and then decreased (almost 15% fewer between 2008 and 2010). Conversely, among households with $5 million or more in assets, avowed interest in spending as little time as possible in investment-decision making decreased (nearly 9% between 2000 to 2008) and then increased by 26% between 2008 and 2010. Both wealthy groups are prime, profitable targets for institutions that sell investments, retirement products, and financial planning and advice.

Before the Uh-Ohs (2000 to 2009), a significant decline in the stock market would have stimulated increased interest among the wealthy to spend more time on decision making to improve investment results. Increased interest among households with assets between $2 million and $5 million may reflect the extent of their feelings of vulnerability; some portion may feel the need to refocus and—through portfolio diversification—salvage their retirement dreams and belief that they can effect financial recovery. For the $5+ million population, decreased interest may be the result of a postcrisis realization that household assets may not be enough to protect them from the ravages of unscrupulous advisors or institutions that value their own profits over customer patronage.

To learn more about high-asset households, current product ownership, life stage, and financial attitudes through the MacroMonitor, please contact CFD.