Most high-worth investors over the age of 25 are still wary of the stock market and searching for protection from losses in their retirement accounts.
That’s according to the Allianz Life 2013 Investor Market Perceptions Study, which found that 95 percent of respondents – it polled those who have more than $200,000 in investable assets – would prefer a financial product with no potential loss or at least some level of protection from loss rather than one with unlimited potential growth but also unlimited potential loss.
Seventy-six percent said they would prefer a product that offers a balance of potential growth with a level of protection that shelters them from up to 10 percent of losses.
Despite the rise in the stock market from 2009 through 2013, investors are still hesitant to put their money at risk. According to Allianz, nearly $8 trillion is sitting in cash because investors are afraid to take risks. Nearly 80 percent of respondents said they expect the market will continue to be volatile and 59 percent said that market volatility was an economic concern when it came to their retirement outlook.
“It’s clear that for many investors the trauma caused by the 2008 financial crisis is still being felt and is dampening their willingness to take on risk with their savings,” said Allianz Life Financial Services President Robert DeChellis. “Although we’ve seen strong equity markets this year, volatility remains a constant concern. With fixed income investments offering disappointing returns, there is a strong need for solutions that can provide solid upside potential but also protect against some of the downside risk that is keeping people from participating in the market.”
In addition to fears about equity markets, the survey also found these investors are unhappy with returns from less-volatile investments. Sixty-two percent of investors surveyed said they are challenged to find sufficient yield/return in today’s low interest rate environment.