Nearly half of mass-affluent and high-net-worth investors (49%) are very concerned about the impact the 2024 U.S. presidential election will have on their finances, far eclipsing their other macroeconomic worries, according to a new study from Janus Henderson Investors.
Investors’ other sources of anxiety include persistent inflation (35%), risk of recession (29%), rising interest rates (27%) and poor stock market performance (20%), noted the research, “Investor Survey: Insights for a Brighter Future.”
Older investors are even more concerned about next year’s presidential election than their children or grandchildren: 69% of the Silent Generation (ages 75+), compared with 37% of millennials (ages 25-40).
No need to panic
The investors surveyed aren’t exactly feeling happy-go-lucky: 71% reported that investing has become more challenging over the past few years, 61% said the cost of living is rising faster than their income and investments, and 7 in 10 expect to see an increasingly challenging market.
Overall, approximately the same percentage of respondents reported feel anxious about their finances (34%) as feel very confident in achieving their goals (36%),
But clients who are discouraged shouldn’t be quick to exit the markets.
“Despite investors’ concern about the 2024 U.S. Presidential election, results haven’t historically been a reason to exit the capital markets,” Matt Sommer, head of the Specialist Consulting Group at Janus Henderson Investors, said in a release. “In fact, looking back at S&P 500 returns from 1937 through 2022, the average annual return was 9.9% in presidential election years, and 12.5% in nonelection years.”
More advice sought
Meanwhile, demand for active management and investor education is robust, signaling that investors seem to recognize that they need professional assistance.
“Among respondents who own mutual funds or ETFs, 66% want active funds in their portfolio – with 29% preferring mainly active funds and 37% preferring an equal mix of active and passive funds. Less than one-in-five investors (17%) prefer mainly passive funds, 12% have no preference, and 4% were unsure. The preference for active management is associated with having a financial advisor, as 34% of investors with an advisor prefer mainly active funds compared to 18% of investors without a financial advisor,” noted the study.
Sommer also commented in the release on the trend toward active management: “With the prospect of higher-for-longer interest rates casting a shadow over future economic growth, investors are increasingly turning toward active management to mitigate risk in their portfolios and differentiate between good and bad companies as higher capital costs create new competitive challenges.”
When asked, ‘How interested are you in financial education and building your knowledge level of investments?” the majority of investors in every age group surveyed acknowledged being very interested or somewhat interested. These collective responses included 96% of Gen-Xers (tied with millennials), 80% of boomers and 60% of the Silent Generation. Which shows it’s never too late to offer education.
The survey results also showed that among investors working with a financial advisor, 65% are very satisfied with the quality of the relationship, 33% are somewhat satisfied, and just 2% are dissatisfied.
Respondents working with an advisor were also more likely to report being very satisfied with their financial situation (52%) than respondents without an advisor (40%).
The majority of investors who have a formal plan (75%) said they’re very satisfied with their advisor. Very satisfied clients responded that their advisor “provides piece of mind that I’m on track to reach my goals” (69%), “cares about me as a person” (61%) and “provides financial education/makes me smarter” (56%).
The survey did not find a relationship between respondents’ high levels of satisfaction and proximity to their financial advisor (in-state vs. out-of-state). Although most investors (70%) reported that their advisor is based in the same state, 73% said they’d be comfortable working with an advisor based in another state.
Janus Henderson Investors surveyed 1,000 mass affluent and high-net-worth investors with $250,000 or more in investable assets “to understand their mindset amid a challenging political climate, volatile market, and unsettled economic environment.” 8 Acre Perspective, an independent marketing firm, conducted the research.