Investors’ moods are changing thanks to the unpredictable financial markets of the past several years. Many now feel the need to protect wealth and not just accumulate it, according to a recent study by Lincoln Financial Group on Monday.
The majority of Americans in the latest Measuring Optimism, Outlook and Direction (M.O.O.D.) of America Survey said that protecting their wealth is more important today than it was five years ago.
Regardless of age, gender or assets, 58% of respondents reported a strong need for wealth protection, and the significance of protecting wealth increased with age when income accumulation typically slows — 72% of those 69 and older cited the importance of protecting wealth compared to 43% of the younger baby boomer generation, or those age 50 to 60.
Only 15% of respondents said they felt “very prepared” to protect their wealth.
As Lincoln Financial CMO Rich Aneser told ThinkAdvisor, these findings were a validation of the post-crisis mindset.
In the past, things like market growth, asset accumulation, asset allocation and portfolio diversification drove the advice relationship and helped investors get where they wanted to go.
“Post financial crisis, that obviously changed dramatically,” said Aneser during a visit to ThinkAdvisor’s New York office. “Then you look at the research and you see that there’s a different set of issues that people are concerned about. They’re concerned about longevity of income, they’re concerned about health care and long-term care costs, they’re concerned about inflation, they’re concerned about taxes … and they’re concerned about market risk.”
The top three concerns that were reported as a key to protecting wealth that came out of the study were running out of money or income, future health care expenses, and the impact of inflation.
This new set of pressing issues points to a change in need of advice, Aneser said. Lincoln’s view is that financial advisors need to take a comprehensive, goal-based approach to planning for their clients.
“You’re seeing the need for this comprehensive, outcome-based advice because the issues people have aren’t benchmarks or a number,” Aneser told ThinkAdvisor. Instead, Aneser said, investors are asking “Will I get to the goals that I have?”
Whether that goal is retirement, financial stability, financial security, getting kids through college, taking care of yourself or taking care of your parents, Aneser added, “you want to have a check-the-box on the outcome.”