Millionaires’ future outlook reached +39 on a scale of -100 to +100—its highest since Fidelity Investments launched its Millionaire Outlook survey in 2006.Confidence in the future was driven by positive sentiment about business and consumer spending (+43 and +42, respectively). However, those perceptions were hampered by a lack of confidence in the value of real estate (-75), the economy (-49) and business spending (-32).
Millionaires, who Fidelity defines as those with $1 million in investable assets and living in households with an annual income of at least $150,000, are clearly divided on the current financial environment: 31% are optimistic, 35% are pessimistic, and 34% are neutral. Interestingly, U.S. stocks have been the No. 1 investment both pessimists and optimists have added to their portfolios in the past year. For optimists, that is followed by domestic equity mutual funds, domestic bond mutual funds, equity exchange-traded funds (ETFs) and real estate investments. Besides stocks, pessimists have gravitated to CDs/money market accounts/cash equivalents, individual domestic bonds, equity ETFs and annuities.
Even those with a current negative outlook still have a favorable outlook on a future recovery (+11). Additionally, those with a negative outlook also were more actively receiving financial advice on general financial and retirement planning.
“One trend has held true throughout the life of this study,” noted Michael R. Durbin, president, Fidelity Institutional Wealth Services. “The millionaire investor’s outlook has been consistently pragmatic about current market conditions and pervasively optimistic about a future recovery. In many ways, what millionaires have been thinking and doing can be a strong indicator for financial trends, as they are often the first to jump on an opportunity in the market, as they have recently with domestic stocks.”
Thus, a “key takeaway” for advisers, Fidelity said, is: “Most millionaires have been feeling confident about the future financial environment and may be considering shifting to more growth-oriented investments. Domestic stocks have been the No. 1 choice of today’s millionaire investor. You may want to consider reaching out to high-net-worth clients about their position in the domestic stock market.”
Among the 1,020 millionaires Fidelity surveyed in partnership with Bellomy Research, average assets are $3.05 million. Their average age is 61, with 61% of these millionaires being men. Sixty-one percent are married, never divorced, 57% are retired, and 58% are the sole financial decisionmaker in their household. Seventy-four percent feel wealthy; those who do not say they would need at least $5 million in assets.
Nearly nine out of ten, 86%, are self-made millionaires, and they point to investments, employee stock options/profit sharing and then compensation as their main sources of wealth. This group is more inclined to want to manage their money themselves and to add equity investments. Among the 14% who were born wealthy, inheritance, entrepreneurship and real estate are cited as main sources of assets, and this group of “old money” typically had more real estate investments.
As to investment goals, 30% of today’s millionaires are concerned with preserving their wealth, and only 20% are interested in increasing it, Fidelity found. Top concerns of the remaining 50%: retirement income, retirement lifestyle and managing investments in retirement.
Another key takeaway, Fidelity said, is: “Understanding your clients’ path to wealth can help you identify more sophisticated investment options that may suit them and help you build revenue and deepen relationships.” Additionally: “Your clients’ outlook can help you identify and align the best investment services for their needs.”
More results from Fidelity are here.