Retail investors continued to prioritize their “bird in hand” in Hearts & Wallets' recent quantitative findings in 2016, even as they can now visualize the "birds in the bush." Nationally, 47% of investors indicated that their number one financial goal remained the build up of emergency funds, up from 2015. At the same time, only 29% felt that they were on track to accumulate the savings they will need to retire. Feeling off-track has been trending upward over the past four years. No doubt, there is a big opportunity to improve motivation and support techniques.
At the same time consumers are more aware of the birds in the bush than they have been. Household's anxiety regarding their financial situation lessened across all wealth segments and net comfort with volatility improved to one of the higher levels observed post crisis. Of note, financial market related concerns were among the lowest of investors’ overall concerns in 2016.
Digging below the aggregate numbers on concerns reveals a tale of two investors. Among the youngest of investors, anxieties continued to rise. 35% of Emerging investors (age 21-27) indicated a high or moderate level of anxiety regarding their current and future financial situation in 2016, a new high since 2010. In contrast, Pre- and Post-Retirees continued to feel better, recording anxiety levels among the lowest seen in several years. While younger investors may view their financial futures with more trepidation than older investors, it is worth noting that younger investors’ comfort levels with volatility have improved the most during the post crisis period.
As financial providers consider their strategies and spend into next year, there is both an evolving and improving opportunity for engagement efforts. Investors are more likely to consider their options and be more responsive to outreach now than they have been. However, their is a critical need to not place all investors in one bucket when it comes to how to best engage. While the birds in the bush are coming into focus for some, others are most concerned with their bird in the hand, and new solutions for emergency funds are likely to resonate.