Orion Advisor Solutions’ inaugural Mind and the Market Investor Sentiment Survey reveals that 66% of investors have a positive frame of mind about their financial future, with four in 10 survey respondents characterizing their mood as confident.
The survey results also show Millennials and investors who work with a financial advisor are generally more optimistic about their own financial future, the U.S. economy, and the U.S. financial markets than other groups.
Half of the surveyed investors are pessimistic about the economic outlook of the U.S. and 52% are pessimistic about the global economy over the next six months. More than one-third (36%) of investors are expecting poor market performance over the next six months with 45% expecting lower investment returns in 2022 versus 2021.
Investors indicated their top concerns center around market conditions – including inflation – market volatility, and the U.S. political climate. To address their concerns about meeting their financial goals, investors said they are primarily focused on saving money, specifically by holding off on big purchases and reducing discretionary spending. Some have also adjusted their retirement plans and/or contributions.
“In a recurring quirk of human psychology, we see that investors can be pessimistic about the broader market and economy while remaining optimistic about their personal economic and investment prospects,” said Dr. Daniel Crosby, Chief Behavioral Officer at Orion. “Financial advisors who understand the disconnect between personal and aggregate sentiment are well-positioned to provide high-quality, individualized advice during periods of uncertainty.”
The survey also revealed key generational differences on topics, including outlook on the economy, stock market and their own financial futures.
- Optimism about the U.S. economy is higher among Millennials (64%) than among Gen X (35%) and Baby Boomers (22%).
- Millennials (62%) are more likely to indicate a positive outlook on the stock market than are Gen X (30%) or Baby Boomers (14%).
- Millennials (82%) are much more likely to have a positive mood regarding their financial future, compared to Gen X (61%) and Baby Boomers (59%).
- Millennials (38%) are more likely than Gen X (23%) and Baby Boomers (7%) to increase investment in the stock market as a way to address their concerns about money and meeting their financial goals over the next six months.
- Millennials (50%) are the most likely to consult a financial advisor, compared to Gen X (32%) and Baby Boomers (27%).
“The optimism among Millennials toward the economy and the stock market is not surprising given their demographically driven longer-term time horizon than Gen X and Baby Boomers,” said Tim Holland, CFA, Chief Investment Officer at Orion.
“Financial advisors who view the recent market pullback as a buying opportunity would likely find a receptive audience for that message among existing and prospective Millennial clients. Considering Millennials are much more interested in working with an advisor than their Gen X and Baby Boomer peers, finding relevant and timely reasons to engage with that demographic cohort should prove beneficial to the advisor and their practice over the long-term.”
Investors working with a financial advisor have more positive outlooks on the economy and their financial futures than investors who are not working with a financial advisor. Orion’s survey reveals:
- Four in 10 (42%) investors working with an advisor have an optimistic outlook for the U.S. economy over the next six months, compared to 24% of investors not working with an advisor.
- Thirty-seven percent of those working with an advisor have a positive outlook on the stock market over the next six months, compared to 20% of those not working with an advisor.
- Thinking about their investments and ability to reach their financial goals, 31% of those working with a financial advisor have a more positive confidence level compared to a year ago, compared to 21% of those not working with an advisor.