Investors have a lot on their minds in the coming decade.
Janus Henderson’s latest 2024 Investor Survey: Insights for a Better Future, found that investors are reducing their portfolio risk as more worry over the upcoming presidential election, economic backdrop of the U.S., and the interest rate environment.
Over three-quarters (78%) of respondents, described as 1,000 mass affluent and high-net-worth U.S. investors, noted concerns over the impact the presidential election could have on their financial situation within the coming 12 months. Respondents were more anxious about the election than any other concerns, including persistent inflation (70%), high interest rates (57%), poor stock market performance (57%), or a potential recession (55%).
Looking further into the long-term, respondents noted fears in the rising cost of healthcare (67%) and national debt (66%), among other items.
In its report, Janus Henderson warns about the risks in pulling out of the market because of short-term instability or changing news buzz. Instead, the asset manager cautions professionals to remind clients of their long-term financial targets.
“In times like these, all investors should keep in mind that changes to a portfolio designed to avoid short-term volatility can often jeopardize long-term goals,” said Matt Sommer, head of Specialist Consulting Group at Janus Henderson Investors. “The news cycle is moving at an incredible pace and headlines can be unnerving, but U.S. equities have remained remarkedly resilient in the face of elevated levels of uncertainty.”
Rather, respondents are acting on the recommendations of their financial advisors and shifting investments to mitigate their concerns. In the past 12 months, Janus Henderson reports that 33% of respondents have moved assets from equities to cash or fixed income investments, while 32% plan to transfer assets from equities to cash or fixed income in the next 12 months.
Others are capitalizing on what they believe will be prime investment opportunities in the following years, including technology (73% of respondents), healthcare/biotech (62%), and real estate (38%).
While nearly half of respondents (54%) said they are preparing for a recession, this is down from 65% in 2023, the firm reports.
Growing satisfaction with advisors
Investors are increasingly pleased in their work with financial professionals. Among those working with an advisor, 67% reported feeling “very satisfied” with the relationship, while 31% said they are “somewhat satisfied.” Nearly all (98%) investors surveyed who use an advisor say they are satisfied with their relationship.
Aside from investments, respondents utilize their advisors to understand growing trends within the market such as artificial intelligence (AI). Janus Henderson’s report highlights a rising skepticism from respondents towards AI technology—73% of clients believe that AI greatly increases the risk of financial exploitation, and 56% believe the technology could financially exploit them or a loved one.
As a result, investors are turning to advisors to educate them on the warning signs of financial manipulation. Forty-five percent of investors with financial professionals say their advisor has already provided them with the resources to avoid fraud, and 29% want their advisor to offer these tools.
Despite their concerns, investors aren’t totally shut off to the technology, Janus Henderson emphasizes in its report. According to findings, a majority of those who work with or are considering working with a professional feel either “good” or “neutral” about their advisor using AI to create educational content (85%) or for administrative tasks (83%).
Still, over a third (36%) would object to their advisor using AI to make investment recommendations, and an even greater number (44%) would be upset if they learned their advisor used AI to respond to their texts or emails.
“When it comes to the use of AI in advisors’ practices, most investors appear comfortable with advisors using the technology to assist with more ‘hands-off’ administrative tasks,” writes Janus Henderson in its report. “However, the large percentage of investors who objected to advisors’ use of AI for investment recommendations or direct communication is a clear indication that clients still strongly value the human element for these key aspects of their advisory relationship.”