Anxious Americans raising cash, adjusting portfolios: New York Life

The midterm elections have provided some answers about Americans’ near-term political future. Nevertheless, a new study shows they are increasingly uncertain about their long-term financial futures.

More than half of adults surveyed expect their living expenses to be higher in the second half of 2022 than the first, and 61% say they're more nervous about their financial futures now than ever before, according to New York Life’s latest Wealth Watch survey released Wednesday. 

According to the report, 3 in 10 adults (30%) who have money invested have made changes to their investment portfolio in the past six months. Among those who have adjusted their investment portfolios, 37% have moved more money into cash, followed by individual stocks (26%) and cryptocurrency (21%). 

Meanwhile, respondents who made changes to their investment portfolios in the past six months said they did so in response to the stock market (35%), an increase or decrease in the level of investment risk (33%), and the costs of goods and services rising due to inflation (28%). Despite these moves, only two in five (41%) said they felt confident about their decisions. 

“For early retirees, these markets can be challenging to navigate as higher interest rates have had negative impacts on traditionally safe assets, like bonds,” Dylan Huang, senior vice president and head of retirement and wealth management solutions at New York Life, said in a statement. “But the silver lining is that higher rates have enabled insured asset classes like annuities to offer higher guarantees, and a blend of insured and traditional asset classes can help people weather a wider array of economic environments.” 

“With inflation spiking, uncertainty in the market and midterm elections, it’s natural for investors to want to make changes or migrate to safety. It looks like most investors have not made changes based on these factors," said Alexis Zuccaro, wealth adviser at SageView Advisory Group. "We, as always, take our clients back to their plan — long or short term — and advise them based on this first and foremost.”

Zuccaro added that the firm's planning process assumes there's a recession or downturn ahead and that many of his clients are "taking advantage of discounted prices in the current market" when possible.

Regarding the type of financial advice that holds the most influence for those surveyed, the report showed that adults are most likely to act on advice or guidance that comes from an adviser (33%) or family member (29%). 

“Unfortunately, when it comes to investing, the point of maximum despondency is often the point of maximum opportunity. Investors left on their own tend to do the opposite and take opportunity off the table when things get tough. However, investors with a well-thought-out comprehensive plan tend to avoid this and generally have better outcomes, increased confidence, and are more likely to reach their goals,” said Josh Strange, president of Good Life Financial Advisors of NOVA.

Generationally speaking, the report showed that Gen Z respondents are most likely to look to social media (40%) for financial guidance.