Nearly three in four affluent respondents to an Allianz Life survey said they’d be willing to give up some gains for protection.
Second-quarter market volatility is making Americans increasingly worried about their finances and retirement savings, with only 31% in a new survey saying they were comfortable with market conditions and ready to invest, down two percentage points from the previous quarter and four points from last year’s first quarter.
The latest market perceptions study from Allianz Life also found that more Americans feared the approach of a major recession in the second quarter than in the 2019 and 2018 first quarters — 48% vs. 46% and 44% — or major market crash — 47% vs. 46% and 42%.
“Volatility has become the norm over the past year and a half, but that doesn’t mean those major market swings are any less gut-wrenching,” Kelly LaVigne, vice president of advanced markets at Allianz Life, said in a statement.
“The collective worry around an impending market crash or recession has been growing steadily since last summer, and people are starting to wonder when the other shoe will drop.”
The study’s findings were based on online surveys conducted in March and May this year among 1,000 respondents 18 and older, and in April 2018 among 800 respondents.
The survey’s findings suggest that volatility might also be making people wary of investing funds. Thirty-seven percent of respondents said now was a good time to invest in the market, compared with 41% who said this in the first quarter.
The survey results further showed millennials were more reluctant than their Gen X and baby boomer counterparts to invest now — 36% vs. 34% and 28% — even though they had the longest way to go before retirement.
Not surprisingly, give ongoing volatility, survey respondents indicated that they were looking to financial products that offer a balance of growth potential and protection.
One-third expressed interest in such a product, up from 27% last quarter, and 72% said it was important to have some retirement savings in a product that protects from loss, up from 68%.
Seventy-one percent of respondents with $200,000 or more in investable assets said they would give up potential gains for a financial product that protects a portion of their retirement, compared with 52% of those with less than $200,000 in investable assets.
“It’s no surprise people want to move toward protection as they see market drops put a dent in their hard-earned savings,” LaVigne said. “This is especially important for people getting ready to retire in the next five to 10 years who might not be able to rebuild their savings in time for retirement.”
Boomers in the survey showed growing concern about volatility’s effect on their retirement savings, with 38% saying market volatility was making them anxious, up from 32% in the first quarter.
“Those that are feeling worried about their retirement savings within the current financial forecast should meet with their financial professional to assess their risk exposure,” LaVigne said. “Creating a strategy that addresses an ongoing volatile market is as important as ever.”
Don’t miss crucial news and insights you need to make informed investment advisory decisions. Join ThinkAdvisor.com now! Free unlimited access to ThinkAdvisor.com which provides advisors, like you, with comprehensive coverage of the products, services and trends necessary to guide your clients in making critical wealth, health and life decisions.