Americans fear another financial crisis, are spooked by investing

Nationwide survey shows younger investors in particular are skittish

Jul 24, 2013 @ 4:17 pm

By

With the Great Recession just a few years behind us, Americans are still spooked by investing, despite the continuing stock market rally.

According to a new Nationwide Financial survey of potential investors with at least $100,000 in investible assets, 83% fear another financial crisis and 62% are scared of investing in the stock market. That is more than the 58% who fear death and the 57% who fear public speaking. The only common fear that evokes similar distress is skydiving (81%).

“We were pretty surprised that people are more afraid of investing than public speaking and dying,” said Michael Spangler, president of Nationwide Funds, Nationwide Financial's mutual fund business. “There doesn't seem to be much understanding of the recovery. There was a double digit return on the equity markets in 2012.”

“Backing away, not taking part in the markets and just living in fear is not a solution,” Mr. Spangler said.

Steven Kolinksy, founder and chairman of Kolinsky Wealth Management, thinks these fears are wildly overblown and that a strong dose of reality would stem the anxiety.

“Things have gotten a lot better,” he said, “yet the average investor has no idea that the S&P 500 is up 20% on the year.”

The problem, as Mr. Kolinsky sees it, is media hype.

“We are in a world of media,” he said. “As good as media can be, it makes people overreact in both good and bad markets.”

Mr. Spangler said much of the knowledge gap especially among younger investors, is from people doing their own research rather than using professionals.

Millennials and Generation Xers are more likely to use websites as their primary financial planning resource (58% and 48%, respectively) as opposed to using an adviser (51% and 43%). Retirees and high-net-worth investors, by contrast, are most likely to use a financial adviser as their primary financial planning resource (78% and 61%, respectively).

“This generation educates itself using online tools, customer reviews — and that's great,” said Mr. Spangler. “But those are sound bites. They need professional help.”

“This group is seeing an acute level of geopolitical unrest and these younger investors just aren't used to this level of distress,” he said. “Political upheaval in Egypt. Economic upheaval in Europe. Add that to lingering effects of the crisis and slow recovery in employment. It's really a multitude of factors.”

Millenials and Gen Xers were also more afraid than others that they won't be able to retire (66% and 65%, respectively), compared with 57% of pre-retirees.

“There's no argument that we're in a retirement crisis,” said Mr. Spangler.

Mr. Kolinsky and Mr. Spangler agreed that the way investors receive financial news is as significant as the information itself.

“You just can't get all of your information in 140-character intervals,” Mr. Spangler said.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

The need for easier investment options.

Rob Barnett of Wilmington Trust makes the case for simpler investment choices for plan participants and sponsors.

Latest news & opinion

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

Wells Fargo sees slowdown in advisers exiting this year

The 2016 banking scandal and public relations fiasco had alienated some of the firm's advisers.

States trying to save DOL fiduciary rule appeal rejection of effort to intervene

California, New York, Oregon ask for rehearing by full 5th Circuit Court of Appeals.

Employees at best places to work focus on the person — and the fun

Employees at best places to work firms focus on the person and fun.

Waddell & Reed sees flurry of senior staff departures

Firm also experiences an almost 30% decline in number of brokers and advisers.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print