In our research, we’ve learned that boomers want safer options, with more predictability. We have heard from financial planners who sense that people are returning to basic principles when it comes to money: Maximize your savings, limit your use of credit cards, keep a substantial emergency fund, know how much risk you can tolerate, diversify your investments; and don’t try to shortcut your way to wealth.
It’s sound advice our parents probably gave us boomers (which we ignored). There is evidence that this safer approach to investing will impact the equities market for years to come.
Only 45 percent of U.S. households owned stocks or mutual funds by 2008, down from 53 percent in 2001, according to the Investment Company Institute, a mutual fund industry trade group. As boomers reach retirement age and start to cash out, the number will stay low.
The well is dry. Even as portfolios begin to recover, consumers are left with smaller home values and debts accrued during the boom years. If they spend less and save more, as many predict, the impact on corporate profits will dampen stock prices for years.
If the consumer has moved when it comes to investing, have you moved, too? Building trust requires knowing the mindset of your clients, and their thinking has changed.