Investors Speak
by P.E. Kelley
Mr. Kelley is managing editor for this magazine. Connect with him at pkelley@lifehealth.comF&G, the Des Moines based provider of retail insurance solutions for annuity, life and institutional clients, has for five years published its proprietary Risk Tolerance Tracker, an ambitious and quite in-depth analysis of how American investors are feeling abut their money… and just about everything that might effect it. From retirement risk, inflation and, in 2024, an historical election, the study attempts to clarify consumer sentiment in all of these these important matters.
Ron Barrett is senior vice president of annuity distribution for F&G, and he spoke in August about the top of mind issues investors have. Not surprisingly, inflation was at the top of the list, though other more broad-reaching and global concerns emerged as well, such as Generative AI and geo-political tensions. At the heart of it all is an apparently deep and growing concern about the safety and viability of their financial futures.
PEK: You just published F&G’s 5th annual Risk Tolerance Tracker. What did you learn about the mood of American investors right now?
RB: The data from our survey this year revealed several intriguing insights into the current mindset of American investors. The study, which was fielded in August, found this year’s U.S. presidential election emerged as a notable source of apprehension, with 72% of investors worried it would negatively impact their finances, in addition to nearly half who were (48%) concerned about its effect on their retirement plans.
Unsurprisingly, inflation continues to be a top stressor, as 80% expressed worry over its potential negative impact on their financial future. However, this has decreased from 85% in 2023, likely indicating a gradual shift in perspective as inflation shows signs of slowing.
Perhaps most alarming is that a significant portion of investors (58%) are navigating this uncertainty without the guidance of a financial professional, underscoring the importance of financial literacy and professional support in managing financial risks amid ongoing economic and political shifts.
PEK: Compared to last year, how has investor sentiment changed?
RB: Investor sentiment shows subtle but notable shifts. While there were no substantial changes compared to the 2023 Risk Tolerance Tracker, the data suggests a cautiously improving outlook regarding overall risk tolerance and financial futures among American investors.
However, some persistent fears remain. For instance, 73% of investors reported being less likely to take financial risks due to events over the past year, a decrease from 78% in both 2023 and 2022, signaling a slight easing in risk aversion. Despite this improvement, concerns about retirement income remain strong, with 66% of investors expressing worries about retirement security, down just 3% from 2023.
PEK: What is the biggest takeaway for financial professionals?
RB:The biggest takeaway for financial professionals is the critical need to emphasize proactive, comprehensive financial planning to help American investors navigate ongoing uncertainties.
Many investors are not fully taking advantage of the guidance available to them, as only 42% reported working with a financial professional. Additionally, only 14% reported having annuities as part of their portfolios. Yet, when asked how important various factors were when considering their investments for retirement income, 88% noted guaranteed income for life as important, just behind maximizing their accumulated income (91%). This ultimately raises a question of whether guaranteed income products are simply underutilized or a missed opportunity for long-term financial security and risk management due to a lack of education.
Financial professionals can play a crucial role in guiding clients toward a balanced approach that includes both growth and stability, addressing their needs for financial peace of mind. By actively engaging investors now, financial professionals can help foster a stronger, more resilient financial foundation that offers greater confidence in the years to come.
PEK: Did any of the survey findings surprise you?
RB: Beyond traditional financial concerns, we were surprised to see that 63% of American investors are increasingly worried about cybercrime and fraud impacting their financial futures.
Elder fraud is an insidious threat that many times likely goes unreported and is on the rise. These crimes can exacerbate financial stresses of those close-to or in-retirement that are often living on a fixed income or have limited to no time to accumulate a bigger nest egg to live on for the rest of their lives.
Additionally, it was noteworthy that 50% of respondents expressed concern about the potential impact of generative AI on their financial futures, signaling a growing awareness of emerging technological risks career and financial planning. Ultimately, these findings highlighted the complex, evolving nature of risks that today’s investors face.
PEK: Do you think this is a bad time for advisors to suggest their client retire?
RB: Most financial professionals understand that financial planning is deeply personal, shaped by each client’s unique life circumstances and goals. There’s no universal formula for investors based solely on age. Success lies in working closely with clients to create a tailored approach. By customizing each strategy to align with individual goals and needs, they can help clients make informed decisions that support their long-term vision, no matter the market conditions.
