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Stock-market volatility produces more changes than simply in the amount of a household's invested assets; it changes how investors think and feel about their investments and how they react. The results of repeated volatility are cumulative. Both investment institutions and professionals are wise to learn more about households with $100K or more in financial assets, because the number that report a lack of trust has grown in the past 15 years and will probably continue to do so in reaction to current instability. This summary examines investor households that hardly trust any investment company or investment professional at all.

Demographics

Demographically, all investor households that report hardly any trust in financial institutions and professionals are similar. In comparison with all high-asset households, mistrustful households:

• Have a head with a mean age of 58
• Have a somewhat higher median household income than that of all households ($97K to $144K versus $86K to $91K)
• Have the same incidences for having a four-year-college degree, being married, being employed full time, and having dependent children (about three in ten)
• Have the same incidences for having retired heads (three in ten) and heads preparing for retirement (two in five)
• Are as likely as all investor heads to be an owner, or part owner, of a professional practice or business.

Product Ownership and Institution Use

Incidences of product ownership between all investor households and mistrustful investor households are the same. However, some differences exist in the mean amounts held in various accounts:

• Investors who mistrust institutions have higher mean balances (than do all investor households) in CDs and Keogh accounts; they tend to have lower mean amounts in money market deposit accounts, publicly traded and nontraded stock, corporate and municipal bonds, and Treasury securities.
• Investors who mistrust professionals also have higher mean balances (than all investor households) in CDs, publicly traded and nontraded stock, individual annuities, Keogh accounts, and tangible assets; they have lower mean amounts in money market mutual funds, stock or bond mutual funds, corporate or municipal bonds, and the cash value of their life insurance.
• No differences exist in the types of institutions that all investor and mistrustful investor households currently use.

Three Types of Mistrustful Investors

Not all 46 million households with investable assets of at least $100K mistrust investment institutions or professionals: 29% mistrust institutions, and 34% mistrust professionals. The single common denominator is that all mistrustful households are more likely than all investor household to agree they "resent excessive executive pay at institutions" they do business with. To understand differences within these subpopulations more clearly, we use a measure that explains investors' motivations. We call these three subpopulations Experienced Investors, Dynamic Investors, and Aspirational Investors.

Experienced Investors represent 40% of investors who mistrust financial institutions and 37% who mistrust financial professionals.

Experienced Investors believe that good planning and financial conservatism result in goal attainment. Smart, informed, and responsible, with a long-term financial plan, they start saving and investing early in adulthood in order to be prepared for anticipated (and unanticipated) life events and retirement. Almost half (46%) are ages 60 and older (roughly one-third are retired). These investors have experienced five economic disruptions—five recessions—since becoming adults. The impact of market turbulence on their investments has proved unavoidable by heeding advice from economists and financial-industry experts; at best, impacts may have been mitigated by asset diversification. In response, many Experienced Investors are more self-reliant and mistrustful than previously. Just recovering from the devastating 2008 recession and now in or approaching retirement, they find that a lifetime of financial responsibility and relative frugality is not producing the expected result: the ability to retire comfortably.

Investment institutions and professionals will have a difficult time in communicating with mistrustful investors convincingly, because mistrustful investors have little reason to believe. However, reaching out to them at this time is important to prevent Experienced Investors who have some trust from joining the ranks of the mistrustful. Messages should be respectful of investors' intelligence and concerns. Communications that consider all their investments have the best chance of being heard. Paint a broad picture; focus on their total financial well-being.

Dynamic Investors represent 17% of investors who mistrust financial institutions and 16% who mistrust financial professionals.

Dynamic Investors want to live life to the fullest. With the big picture in focus, most are willing to delay some immediate gratification to achieve their long-term financial goals balanced with the enjoyment of life today. Proactive and highly productive in their own areas of expertise, they set high standards for chosen providers. Although technology savvy, Dynamic Investors on occasion seek real-time assistance from a knowledgeable person who knows them—not a call center, online portal, or robo-advisor. Dynamic Investors' high level of self-confidence means they are willing to take more risk than are other types of investors. Many recognize that investing may appear to some people to be legalized gambling with the potential to provide long-term gains. Well-informed and curious, they are aware that many factors could negatively affect their ability to retire comfortably but are in an overall financial position to take a chance on the stock market, because many still have a window of time in which to recover a loss. Repeated losses will likely force them to reconsider and reduce their amount of risk exposure. Dynamic Investors don't like to hold onto "losers" in their portfolios.

Service and competence determine how and where Dynamic Investors vote with their dollars. If a provider fails to deliver once, that provider may not have a second chance. Investment institutions and professionals should not be tempted to communicate soothing platitudes or conventional wisdom to Dynamic Investors. These investors recognize that today's world is far different than it was a decade ago and question how an organization has evolved to meet the new conditions. Business as usual is neither realistic nor acceptable. They want to know what a provider offers. They think holistically; to reach them effectively, a provider needs to do the same.

Aspirational Investors represent 11% of investors who mistrust financial institutions and 14% who mistrust financial professionals.

Aspirational Investors work hard to have it all. However, they are unwilling to sacrifice today's wants for tomorrow's needs. They are the youngest of the three investor groups (mean age is 46). The past two recessions have had a negative impact on their savings and investments during critical life stages: when starting out and during peak earning years. Aspirational Investors stay close to their money—frequently checking balances, for example—because making money not only is an outward sign of success but also provides a reward for following the rules. When balances in investment accounts decline, they feel the loss emotionally. Because Aspirational Investors are focused on career and family, many rely on professional advisors. When professional advice fails to be reliable, the advisor is at fault; Aspirational Investors are quick to lay blame on others.

Aspirational Investors are important to monitor because some portion will evolve to become Dynamic or Experienced Investors. Because of a herd mentality, unchecked mistrust could easily grow among members of this group. Similar to other investor types, Aspirational Investors consider their total financial picture when making decisions; unlike other mistrustful investors, they do so for different reasons. This group is constantly juggling wants versus (often perceived) needs and long-term versus short-term financial goals. Prioritizing can be extremely challenging and frustrating for them. Aspirational Investors are looking for a realistic way forward, a plan to follow that will ensure the desired outcome. Communicating with these investors is always important but especially during turbulent-market times. Institutions and professionals would be wise to come to know Aspirational Investors better—many represent the future of their business. Messages should focus on the best offer to make their dreams come true in today's environment, because following the old rules is obviously not going to work for them going forward.

The past 15 years have seen several periods of increased market volatility. After each period, investors took longer to recover and to begin to become active in investing than previously. When investors did return, the number who did so was lower than before. Just when investors start to recover from the volatility of the Great Recession (2008–09), the market is experiencing another period of volatility. Financial institutions and professionals who wish to retain and gain market share in the current environment need both to understand investors' needs within the context of their complete financial situation and to communicate with them in a manner that appeals to their psychology.