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Affluent comfortable with higher risk for a portion of assets |
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Overall, 68% of affluent respondents indicate that they agree with the Spectrem Group survey statement, “I set aside a portion of my assets for more speculative or higher risk investments”—a large percentage with high risk tolerance, for part of their portfolio.
The affluent, with one million or less in investable assets, are not as likely as wealthier groups to take on high risk (60%). The $1-3MM group revealed even more people with high risk tolerance, raising their percentage to 72%. For those with assets over $3MM the percentage droops only slightly to 69%. Once again age is a driver for this question with the younger segment more risk tolerant and the older group more risk averse.Advisors should also understand that affluent investors, below age 65, are primarily in wealth building mode (p.1). This, combined with higher risk tolerance for a portion of their assets, may spell greater opportunity to introduce your affluent clients to investment vehicles they may not have considered before.But care should also be taken when considering timing and risk in a client’s overall portfolio. Recent Spectrem research shows that risky hedge fund investing has seen a notable decrease among the affluent. This indicator, as well as a sharp increase in respondents not investing, and decreases in stock and stock mutual fund investing (p. 4), reveal that the affluent may have less overall taste for risk these days. Though the affluent are optimistic about the economy and open to balanced risk, per Spectrem research, they are trending towards moderation with overall investment choices.
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High Net Worth Advisor Insights Newsletter April 2008
