NEW YORK--(BUSINESS WIRE)--Investors are eager for more help and education regarding income investment planning and their advisors can play a key role in helping them “Guard their Gains,” according to a new survey from Nuveen.
Nuveen conducted the survey of more than 1,000 high-net-worth investors as part of its ongoing efforts to assess the scope and complexity of investors’ needs and desired outcomes. In the first release of its findings, Nuveen highlights an investing environment marked by positive sentiment driven by strong market returns. However, against this bullish backdrop, investors shared their greatest concern centered on the loss of their income due to investment risk. The study also showed that despite the intense focus on investment risk, there are several other key risks that investors have less familiarity with and that by addressing these risks could help guard their portfolio gains. Highlights from the study include:
Feeling Bullish About Economy and Household Finances
- A majority of investors (58%) has a positive outlook about the economy heading into 2018, similar to the 57% who had a positive outlook for 2017 – and a substantial improvement from the 38% who expressed a positive outlook for the economy in 2015.
- Millennials (ages 18-37), in particular, appear to be flying high: 83% have a positive outlook for their household finances, 75% have a positive outlook for the economy in 2018, and 75% said they’d experienced wage growth in the three months prior to the survey.
- Many investors feel that they’ve recently done well financially – in part, perhaps, because of the stock market boom of 2017.
- A majority of investors (67%) have a positive outlook on their household financial situation, compared to a little over a half (54%) in 2015.
- Despite such optimism, the vast majority of investors (77%) say the larger economic situation makes investing more complex.
- When it comes to portfolio risk, four out of five (80%) either always or sometimes pay attention to investment risk – that is, the risk of losing money.
- Yet, they are less attuned to other risks such as inflation (72%), income volatility (69%), interest rate risk (68%) and credit risk (46%).
- Perhaps this is why more than 3 out of four investors (77%) rely on a financial advisor (a moderate amount or a great deal) to help with income planning.
2018 Tax Reform
- Nearly two-thirds of investors (65%) approve of the new tax plan enacted in 2018, and a majority (61%) believe the plan will be at least somewhat beneficial to them personally.
- Millennials are much more likely to approve of the new tax plan (83%) than their older counterparts, Gen Xers ages 38- 52 (63%), young Baby Boomers ages 53 - 63 (61%), older Baby Boomers ages 64-71 (50%), and Matures ages 72+ (58%).
- The perceived benefits of the tax plan decline with age – 85% of Millennials see a personal benefit, compared to 59% and 57% for Gen X and young Boomers, and 46% and 45% for older Boomers and Matures.
- Views of the plan also vary based on the respondent’s investable assets, with those in the $500,000 to $999,999 range (69%) appearing to be the most optimistic about the tax plan’s effect on their personal situations.
Investors Signal Concern about Market Complexity and Risk of Loss
- Despite investor optimism, three out of four investors (77%) agree that the broader economic situation is making investing more complex.
- A vast majority of investors (80%) either always or sometimes pay attention to Investment Risk—the risk of losing money—as they consider their portfolios.
That concern or focus appears to decline however, when it comes to
considering ways to guard income investment gains by addressing other
- 72% consider Inflation Risk as it applies to their portfolios
- 69% of investors consider Income Volatility
- 68% of investors cited Interest Rate Risk
- 66% expressed concern over uncertainty associated with Taxes
- 46% of investors consider Credit Risk.
Investors Look to Financial Advisors for Help in Understanding, Navigating Risks
- More than three out of four investors (77%) rely on a financial advisor—either a moderate or a great deal—to help with retirement income planning.
- Further, 56% of investors indicated that in the next six months they would like to discuss with their financial advisors a portfolio that can generate a steady stream of cash income while seeking to preserve capital.
Financial Advisors Can be Key to Helping Investors “Guard their Gains”
Financial Advisors are uniquely positioned to help clients understand and address the various risks that can chip away at the gains made in their clients’ income-focused portfolios, not just protect against loss. With more and more investors seeking specific outcomes from their investment portfolios, Nuveen provides a robust resource guide of information and strategies to diversify income. Nuveen encourages advisors to take advantage of the following resources to engage clients on the issues important to achieving their investment goals.
The Need For Income Diversifiers - Is Your Portfolio Providing The Income You Need?
Timely Market Commentary
- 2018 Mid-Year Outlook: (Still) Risk On
- Nuveen Weekly Fixed Income Commentary
- March Fed Meeting: Powell Takes The Mic With A Hike
Income White Papers
- Fixed Income Strategies For Low And Rising Rates
- Positioning Bond Portfolios For Rising Interest Rates
- Tax Cut Package Largely Spares Municipal Bonds
- Do Tax Rates Affect Municipal Bond Yields?
About the 2018 Income Diversifiers Study
The survey was conducted online by The Harris Poll on behalf of Nuveen within the United States between February 22 and March 8, 2018 among 1,010 US adults aged 21+ with at least $100,000 in investable assets who are primary or shared decision makers for financial decisions for themselves or their family, and are currently working with a financial advisor. Figures for gender, age, race/ethnicity, household income, investable assets, education, household size, employment status, marital status, and region were weighted where necessary to bring them into line with their actual proportions in the population.
Nuveen, the investment manager of TIAA, offers a comprehensive range of outcome-focused investment solutions designed to secure the long-term financial goals of institutional and individual investors. Nuveen has $967 billion in assets under management as of 3/31/18 and operations in 16 countries. Its affiliates offer deep expertise across a comprehensive range of traditional and alternative investments through a wide array of vehicles and customized strategies. For more information, please visit www.nuveen.com.
Nuveen Securities, LLC, member FINRA and SIPC.
The information contained on the Nuveen website is not a part of this press release.