Wells Fargo Survey: Affluent Investors Feeling Good on Financial Health; Yet More than Half Worry about Losing Money in the Market

Four in 10 affluent investors do not trust their ability to manage their money during market turbulence Seven in 10 say their FA is as important to them as their doctor

The majority of affluent investors say they are feeling good about their financial health and their ability to manage and invest their money, but many have less confidence on managing their money during market turbulence, according to a new Wells Fargo Affluent Investor survey. Harris Poll conducted the survey online of 1,983 affluent investors ages 30-75 who have $250,000 or more in investable assets, excluding retirement and property assets.

Strong Partnership with their Financial Advisor

With much of their wealth in the stock market, more than half (54%) worry about losing money due to fluctuations in the market. The affluent are heavily invested in with a median of $450,000 in the market. One in five of all affluent investors are not sure how much they have in the stock market.

Four in 10 (39%) affluent investors don’t trust themselves to manage their own investments during market turbulence. This jumps to nearly half (49%) for affluent women and a third for men.  Two-thirds (65%) of affluent investors look to a financial professional as the most trusted source for financial guidance or advice.

“A financial advisor’s ability to recognize and acknowledge a client’s natural response to market volatility is the key to making sure that rational perspective prevails, and that’s something that investors say they appreciate,” said Joe Nadreau, head of Innovation and Strategy for Wells Fargo Advisors.

Six in ten (61%) of the affluent currently work with a financial advisor (FA).  The FA relationship is seen as a valued partnership.  Nearly nine out of 10 with an advisor want their FA to be a partner in their financial planning, instead of just telling them what to do with their money.  Seven in 10 say their financial advisoris as important to them as their doctor.

“With investors telling us they view their financial advisor as important to them as their doctor, it underscores the vital role that financial advisors play in the financial well-being of their clients. A financial advisor can help by developing an investment plan that offers clarity and direction through market turbulence so investors can stay on course and transfer wealth to their heirs,” Nadreau added.

What’s in the Golden Nest Egg?

Three-quarters (74%) of non-retired affluent investors are currently able to save what they need for their retirement goals. As a result, confidence in retirement savings is high among the affluent with 92% saying they feel very or somewhat confident they will have enough money to live the lifestyle they want throughout their retirement or sustain them throughout retirement.  Overall non-retired affluent investors expect to need a median of $1.2 million and have saved $750K. The non-retired affluent with $250k-$1 million in investable assets expect to need a median of $1 million in retirement and have saved $500K, while the non-retired high-net-worth with over $1 million in investable assets expect to need a median of $2 million and have saved $1.9 million.

Regrets? They Have a Few

Despite their comfort and confidence, affluent investors say there are a few things they wish they’d done better or differently when it comes to money.  In looking back over 10 years, the most common regret was not “having made better investments.” Thirty-seven percent of the affluent agreed with that statement. The next two regrets showed contrasting views the affluent have on wealth. They regretted “not saving more and spending less” (29%) and “not having enjoyed their money more” (15%).

Prospects on Leaving an Inheritance

For nearly three out of five (57%) affluent investors, leaving an inheritance is important to them. Seven out of 10 (71%) have taken steps to prepare for an orderly transfer of wealth to their beneficiaries. Yet 29% have not taken steps for the wealth transfer. Some find it tough to get that conversation started and don’t understand what’s involved. One quarter of affluent investors say they feel uncomfortable talking to their family about their estate plan and 25% say they don’t understand the complexity of transferring their wealth to the next generation.  And one in five (21%) say they will not be able to leave an inheritance at all because they need the money to live on in retirement.

“People who have worked hard to become affluent said it’s important to them to transfer their wealth to their heirs, so it’s essential that their investment plan include preparations to do that in an orderly way,” Nadreau said.

Interest in Automated Investing Tools, but Only with Help of Financial Advisor

Affluent investors with a financial advisor are more likely to see technology complementing the services of their financial advisor rather than replacing it. Affluent investors recognize the role that technology can play in helping them manage or monitor their investments.  Four in five (79%) say it is important for them to have access to their investment information any time, night or day. Two-thirds (66%) say it’s important to them to be able to keep track of all of their accounts from multiple financial institutions online in one place.

When affluent investors were asked about their familiarity of automated investment advisory services (robo-advisors), just over one in five (22%) say they are very or somewhat familiar. And of that subset, one third (33%) currently use or have used one to manage their finances. More than three-quarters of affluent investors (77%) with a financial advisor say they would like to see their financial advisor use automated investment tools to determine the most financially beneficial portfolio mix. Three-quarters say that a robo-advisor could never take the place of a financial advisor. Nearly two-thirds (65%) of those with a financial advisor say they would be interested in using technology to manage their investments, but only with the help of a financial advisor.

“While investors recognize that technological tools are important and they’re willing to embrace them, an advisor’s ability to relate to a client on a human level adds a dimension that online tools alone can’t match,” Nadreau said.

Most telling is that 52% say that they will never be comfortable working with a robo-advisor. However, half of affluent investors say they are likely to try using one in the next five years. There is a big age difference, however, with most of those in their 30s (71%) and 40s (61%) saying they would try one in the next five years. The comparable figure is 46% for those in their 50s and 27% for those aged 60-75.

About the Survey

On behalf of Wells Fargo, Harris Poll conducted 1,993 online  interviews of affluent investors age 30-75, surveying attitudes and behaviors around financial health, financial planning, saving and investing, financial advisors, retirement preparation, and financial services technology. The survey was conducted from May 5 to May 26, 2015. To target the affluent investors, the survey data includes only respondents who had $250,000 or more in investable assets (excluding the values of retirement savings and property).

Data were weighted as needed to represent the population of those meeting the qualification criteria. Figures for education, age, gender, race, ethnicity, region, household income were weighted where necessary to bring them in line with their actual proportions in the population.

About Wells Fargo & Company

Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.7 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through 8,700 locations, 12,800 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 266,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2015 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially.

About Harris Poll

Over the last 5 decades, Harris Polls have become media staples.  With comprehensive experience and precise technique in public opinion polling, along with a proven track record of uncovering consumers’ motivations and behaviors, Harris Poll has gained strong brand recognition around the world. Contact us for more information.