2020 was an unexpected year of events including the pandemic, social unrest and market volatility. These events created lasting impacts on the financial industry, allowing both financial professionals and investors to learn from the events.
We wanted to learn more about the impact of these events, so we conducted a survey. Our inaugural Risk Tolerance Tracker surveyed approximately 1,500 American investors1 exploring how the events of 2020 made them more or less risky. The following results and conclusions were found.
1 To qualify for the survey, respondents had to be at least 30 years of age, have sole or shared financial decision-making responsibility for their household, and own financial products valued at $10,000 or more.
41% of women pursued only cautious/highly conservative investment strategies.
Women reported a more risk-averse approach to investing in comparison to men.
41% of women have pursued only cautious/highly conservative investment strategies compared to 22% of men
37% of men have shifted their asset allocations to be more aggressive during this time compared with only 27% of women
60% of respondents claimed they were worried about retirement income, especially Gen X respondents.
60% worried about retirement income stemming from the past six months of the pandemic, social unrest and market volatility
This is especially pronounced for Gen X with 67% worried about retirement income
American investors also feel like their financial safety net has been taken away
Ways to Take Control and Shift Risk
From the adverse events of the year, investors can learn how to be better prepared for future financial safety.
weigh the pros and cons
Each individual’s appetite for risk is different-weighing the pros and cons of any strategy is important
build a holistic plan
Understand the importance of using a financial professional who can help you build a holistic plan that includes income guarantees like annuities
annuities = income You can’t outlive
Unlike any other financial vehicles, annuities can provide income that you cannot outlive, yet only 15% of survey respondents own them
As we look back on each year, it’s always good to learn from our experiences and reflect on how we can adapt our ways. The year 2020 made financial investors less likely to take risks in general, but they can also learn from these opportunities and be better prepared for any future recurrence.
To learn more about the survey or how you can adjust your own financial risk, visit our full Risk Tolerance Tracker.