Two-thirds of wealthy Americans believe country is worse off

By BenefitsPro


By Paula Aven Gladych

Most high net worth American households believe the country is worse off than it was in 2007.

A new survey by Northern Trust found those with $5 million or more in investable assets believe the rising deficit, ballooning national debt and stubborn unemployment rate are negatively impacting the nation’s five-year outlook.

Twenty-nine percent of high-net-worth investors attribute their negative outlook to the Obama administration, but about the same amount pointed to the president’s re-election as a reason for their positive outlook for the future.

Although two-thirds of respondents believe the country is worse off, wealthy business owners showed a more positive outlook. Eighty percent said they planned to recruit more workers or would keep staffing levels stable in the next 18 to 24 months; 22 percent anticipate making capital investments in upgrading computers and other information technology within the same time period.

“The survey results mirror our clients’ divergent views around U.S. fiscal policy,” said Katie Nixon, Northern Trust’s chief investment officer for wealth management. "In Northern Trust’s view, slow economic growth in the U.S. combined with an accommodative monetary policy, lends support to investing in risk assets such as equities."

When describing the state of their own finances, close to three-quarters of high net worth individuals expressed confidence they would achieve their financial goals, with only one in five less confident now than they were in 2007. Forty-one percent sited improved investment returns as the main reason they feel better off today. High net worth investors were split on their primary investment objectives, with 37 percent leaning toward growing wealth and 23 percent focused on generating income. The remainder said their paramount concern was capital preservation.

Just one quarter said they’re in a worse financial position now than in 2007. Negative sentiment was slightly stronger among men, with 25 percent versus 20 percent of women saying their household family finances had worsened. High net worth men were also less optimistic about the broader economy: 70 percent believe the country is worse off today than five years ago, compared to 56 percent of women.

A different picture emerges for investors with an average of $500,000. For this group, confidence has been shaken, with fewer than half expressing a high level of certainty they will achieve their financial goals. Just 60 percent of affluent investors who have $2.3 million on average express a high level of confidence.

The need to align financial goals with investments emerged as an important theme for high net worth respondents. A large majority (81 percent) said they prioritize the achievement of their life goals when they do their financial planning. Forty-one percent believe diversification of their investments is the most important action they have taken to make sure their life goals are met. Nearly one quarter said they had also increased their savings to achieve their long-term goals.

“Our survey found that 63 percent of wealthy investors are willing to take a calculated risk," said Nixon. “We know that risk and return are related, and we believe in taking thoughtful risk for clients to enable them to accomplish their financial goals. The success of this approach is no longer measured solely as performance versus an industry benchmark, but is measured against the achievement of client goals. Redefining success, and building portfolios aligned with goals allows clients to avoid some of the behavioral pitfalls that plague investors."

The survey was conducted online between Nov. 16 and Dec. 17, 2012, by Phoenix Marketing International and NIA Enterprises. The data came from 1,700 online interviews.

Northern Trust Corp. is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide.

Originally published on BenefitsPro.com