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Hearts & Wallets: More people see themselves as inexperienced investors

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The number of people who describe themselves as inexperienced investors has increased during the past year, new research reveals.

Hearts & Wallets LLC released this finding in a survey of more than 5,400 U.S. households, the survey tracking specific segments and product trends. The report, “Investor Mindset in Mid-2012: Concerns, Attitudes and Beliefs,” is the latest release from Hearts & Wallets’ 2012 Investor Quantitative Panel, which is both a proprietary database and series of syndicated reports.

The number of investors who characterize themselves as “very inexperienced” with investing jumped to 41 percent in 2012 from 27 percent in 2011.

Investors who say they are very uncomfortable taking risk also grew to 35 percent in 2012 from 28 percent in 2010. Only one in 25 investors now feels very comfortable accepting investment risk volatility in the hope of getting a higher return, the survey finds.

“Investors are in a financial ‘malaise,’ and a crisis of confidence,” says Chris Brown, Hearts & Wallets partner. “Low interest rates are making it difficult to find adequate reward in the markets for their hard-earned dollars. And they don’t know where to turn for advice to make informed financial decisions.

“Financial services firms may want to consider products and services that directly address anxiety, which tends to peak in middle age,” he adds.

Since 2010, the survey reports, risk-aversion has been most pronounced among pre- and post-retirees. But it’s also a concern among younger investors.

Only 21 percent of “accumulators,” or investors in prime earning years, and 16 percent of pre- and post- retirees are “somewhat” or “very” comfortable with market volatility.

Although investors struggle to understand their investments, 25 percent of them do not like thinking about money, the survey reveals.

The respondents also do not think government is doing a great job: Only 6 percent agree that current policies put the U.S. on the right track.

Americans see employer 401(k) or 403(b) relationships as short-term relationships and do not envision employers as providing guidance, the report adds.


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