Survey: Investor Patience Wears Thinner As Market Sags
Investors growing sophistication had them riding out the previous stock market downturn, having heard repeatedly from advisors that that choice would pay off in the long run. But as negative news from the market continues, a new study finds that investors’ patience is wearing thin.
According to the Principal Financial Well-Being Index, a national quarterly survey of more than 1,200 employees of growing U.S. businesses done by Harris Interactive, Rochester, N.Y., for the Principal Financial Group, Des Moines, Iowa, 28% of workers surveyed said they have moved some of their investments to less risky choices, up from 14% three months ago.
Response to recent legislation increasing contribution limits to employer-sponsored or individual retirement accounts, which enjoy favored tax status, has been mixed, according to the survey.
About 30% of respondents said they plan to put more in their retirement plans due to the legislation; another 33% said they dont see the relaxed rules impacting their financial well-being.
“The Principal Financial Well-Being Index tells us that the vast majority of American workers continue to remain very concerned about their financial future, yet workers react in somewhat divergent ways, which reinforces the call for vigilant employee education,” says Daniel Houston, senior vice president, Principal.
“Evidence from earlier Indices shows that American workers have developed more tolerance for market fluctuations–a sign that investment education is paying off. However, after three more months of a flat market, the survey shows that investor patience is beginning to wear thin.”
Also up is the percentage of employees who have not yet planned for retirement, according to the survey.
Another survey finding is that employees who work in small firms (10-500 employees) are less likely to have begun planning for retirement than employees at larger businesses (500-1,000 employees).
“This shows that education is an even more critical issue for growing businesses, which may not have the resources to effectively help employees plan for financial well-being,” Houston says.