Market Perceptions Study

Caution & Trepidation On The Road to Retirement

Fear of market uncertainty continues to drive preference for income guarantees

MINNEAPOLIS – Dec. 2, 2015 – Despite relatively stable market performance in 2015, Americans remain nervous about financial market stability and it’s the main concern keeping them from investing, according to the 2015 Market Perceptions Study from Allianz Life Insurance Company of North America (Allianz Life®).

The second annual study also found that, compared with responses from the 2014 study, an increasing proportion of Americans surveyed would rather buy a financial product that includes guaranteed returns with no chance of loss rather than one with higher growth potential but the possibility of losing value.


Negative on stocks and in search of guidance

More than a third of respondents (37%) said “fear of market uncertainty” would prevent them from investing today if they had extra cash available. That’s slightly lower than the 40% who expressed that concern in 2014, but it remains the top reason keeping them out of the market, followed by “lack of reliable financial guidance” (23%) and “today’s low interest rates” (21%). This attitude seems to be driving interest in products with guarantees, as 81% – up from 78% in 2014 – said they find a product with 4% return that is guaranteed not to lose value more attractive than one with 8% return that is vulnerable to market downturns.

In fact, a majority of Americans have a somewhat negative impression of today’s stock market, with 34% saying they are “worried” and believe the market is “too volatile and too risky” for their investment style and 18% saying they feel “the stock market is a necessary place to invest money for the long term, even though it can be nerve-wracking at times.” A quarter of respondents said they believe that “with a balanced approach, the stock market is a smart place to invest a portion of one’s assets” and 23% said they are “comfortable with the stock market” because they are in “for the long term.”

Fear of market uncertainty also continues to drive popular opinion on retirement strategies, with 62% of respondents agreeing that, when making retirement plans, they assume the market will continue to be uncertain, similar to the 64% who agreed with that statement in 2014. Accordingly, 79% of respondents agreed that it’s important to have a guaranteed source of income in retirement, nearly equal to the 80% who agreed in 2014. Only 26% said they are comfortable with current market conditions and ready to invest now, down slightly from 28% in 2014.

“Whether it’s a hangover from the market crash of 2008 or the various bumps in the road we’ve experienced along the way, the majority of Americans are simply not comfortable with any type of market volatility and are looking for ways to mitigate exposure while still building up their retirement nest eggs,” said Katie Libbe, vice president of Consumer Insights for Allianz Life. “Persistent desire for guarantees in this market environment tells a compelling story that, regardless of how the market actually performs, Americans want some type of protection against losses in their retirement savings strategy.”

Whether it’s a hangover from the market crash of 2008 or the various bumps in the road we’ve experienced along the way, the majority of Americans are simply not comfortable...

Summer Market Swoon Brings Mixed Reaction

Interestingly, the market swoon that took place in late August through September 2015 was not as significant a factor in driving more conservative investment behavior as one might assume. When asked how they felt after the low point of the market decline on August 25, nearly two in five (38%) said they didn’t remember and a full quarter said they weren’t worried and left their investments alone. Yet many did have an adverse reaction, with 17% saying they were anxious about the downturn, 13% saying they were worried they would lose a lot of their retirement savings, 10% noting they felt too nervous to put more money in the market, and 9% believing they needed to move their money to less risky investments.

In terms of how they will invest in the future, the majority said they were unaffected – either investing the same way but paying more attention to their investments (24%) or making no changes because they are in the market for the long haul (38%).

Extra Cash – What Would You Do?

When asked what they would be most likely to do if they had extra cash today to purchase a financial product for their retirement, responses were very similar to those provided in 2014:

  • 36% said they would put extra cash into a product that offers a balance of potential growth and some level of protection (up to 10% growth, a level of protection if the market goes down more than 10%) – down from 39% in 2014.
  • 22% said they would put extra cash into a product with modest growth potential (2%-3%) and no potential loss – up from 19% in 2014.
  • 21% said they would put extra cash into a savings account earning little or no interest – up from 19% in 2014.
  • 13% said they would hold their extra cash and wait for the market to correct before purchasing a financial product for their retirement – up from 12% in 2014.
  • 9% said they would put extra cash into a product with high growth potential and no protection from loss – down from 11% in 2014.

What Lies Ahead for the Market in 2016?

According to the study, the majority of Americans have a healthy outlook for the market in 2016. Most respondents predict there will be some growth, but it will be accompanied by a level of volatility. More than two-thirds of respondents (67%) predict “modest volatility” over “not much volatility” (18%) or “significant volatility” (15%). More than half (51%) expect market growth of 5% or more, with nearly a third (30%) predicting flat or minor growth for the year.




About Allianz Life
Allianz Life Insurance Company of North America, one of FORTUNE’s 100 Best Companies to Work For in 2015, has been keeping its promises since 1896. Today, it carries on that tradition, helping Americans achieve their retirement income and protection goals with a variety of annuities and life insurance products. As a leading provider of fixed index annuities, Allianz Life is part of Allianz SE, a global leader in the financial services industry with 147,000 employees worldwide. More than 85 million private and corporate customers rely on Allianz knowledge, global reach, and capital strength to help them make the most of financial opportunities.