Employees have a new attitude about investing: 7 key retirement trends for 2024
Employers are not “responsible for providing for my retirement,” say employees, and only 1 in 4 is comfortable leaving money in former employer plans, however, they are more open to employer involvement, says a new report.
Americans are feeling more experienced with investing and are embracing the benefits of professional financial advice while emphasizing the importance of emergency funds and keeping a wary eye on inflation, according to a report that spotlights critical trends in the attitudes of investors for 2024.
The research report from the data and benchmarking firm Hearts & Wallets tracks more than 50 attitudes related to saving and investing based on a survey of 5,846 U.S. households for the firm’s Investor Quantitative Database. The report, “Attitudes & Sentiment 2023: Driving Corporate Strategy in Response to Changing Consumer Needs,” highlights seven key trends that emerged from the survey and help demonstrate the mindsets of investors as the new year gets underway.
“How firms execute on these seven trends depends on their business objectives, current capabilities and competitive strengths,” said Laura Varas, CEO and founder of Hearts & Wallets. “Optimal long-term strategy for growth should reflect how these trends play out for specific customer targets and distribution channels.”
Trend 1: Investors feel more experienced
The report shows that 31% of households feel experienced with investing – the highest level since the survey began tracking the metric in 2011 when just 18% of U.S. households expressed that same feeling. According to the report, those consumers who see themselves as experienced investors are more likely to both make decisions on their own and to use paid investment professionals. Meanwhile, 28% of households feel very inexperienced with investing – a drop of 17 percentage points since 2015.
Trend 2: Millennials come to terms with market volatility
In 2011, only 16% of millennials were comfortable accepting market volatility, five percentage points lower than Gen X and the baby boomers. In the subsequent years, millennials have changed their views dramatically on the issue. In the most recent Hearts & Wallets survey, 46% of millennials said they were comfortable with volatility, which was 18 points higher than Gen Z and 22 percentage points higher than baby boomers. Gen Z saw a marked decline from 43% feeling comfortable with volatility in 2022 to 28% in 2023. Overall, 34% of households say they are “very” or “somewhat” comfortable accepting volatility in exchange for a possibly higher return, an increase of 15 percentage points from 2011.
Trend 3: Embracing advice
According to Hearts & Wallets, people’s receptivity to financial advice is at its highest in a decade. The survey found that 32% of households see value in paying for financial advice, the highest that figure has been since it was first tracked in 2013, when 18% expressed the same sentiment. The report indicated that millionaire households are showing the greatest growth in wanting to pay for professional financial advice. However, “despite progress in perceptions about advisors, the financial advice profession faces headwinds in articulating value proposition and justifying price,” according to the report. “Consumers are undecided how recommendations from robo-advisors and online tools compare to those of human portfolio managers and advisors.”
Trend 4: A central role for emergency funds
More Americans are striving to balance multiple saving and investing goals in today’s complex landscape. The Hearts & Wallet survey indicated that 57% of households are saving for more than three goals, compared to 44% of households in 2013. In fact, 24% of households cite more than five goals. Of those goals, emergency funds are the prevailing top priority with 52% of households citing it as one of their saving and investing goals. Gen Z’s top goal is “to have enough money to work less/spend time as I want when I am older.”
Trend 5: Inflation tops concerns
Unsurprisingly, Americans pointed to inflation as their top investing and saving concern with 44% of households citing it, but that concern remained unchanged from 2022. Other top concerns included the U.S. economy (39%), the future of Social Security (38%) and setting aside sufficient funds for retirement (35%). In addition, managing finances while aging has gained traction as a concern among Americans. Approximately 1 in 5 households in the survey said they were highly concerned about the ability of loved ones to manage their finances as they age.
Trend 6: Favoring a single firm
An attitude that has seen a notable change over the years is the desire to bank and invest at the same firm. In 2010, 23% of those surveyed expressed a wish to bank and invest at the same firm, and that number had climbed to 35% of households in 2023.
Trend 7: Understanding the background of funds
Investors increasingly want to know about the people making decisions about the funds where they invest their money. According to the survey, 36% of households say it “is important to me which investment companies manage my mutual funds regardless of whether I or a financial professional has chosen the funds.”
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“Shifts to wanting to bank and invest at the same firm, interest in asset managers and preference for single, multi-asset class product over portfolios may shift the competitive landscape to favor banks and the market power of asset managers,” the report noted.