High Net Worth Insights A Spectrem Group Journal Volume 16 | Number 1 | January 2020 ALSO INSIDE The Spectrem Affluent Investor Confidence Index Parenting and Education + Let’s Talk, But Not On Social Media pg. 5 Subscribe TODAY! http://goo.gl/eaV8DS www.spectrem.com When Will You Get Around To It? pg. 8 Using One’s Face As A Security Measure pg. 11 High Net Worth Insights Journal ISSN 2576-6481 © 2020 Spectrem Group. All Rights Reserved. 1 Contents 02 Parenting and Education 05 Let’s Talk, But Not On Social Media 08 When Will You Get Around To It? 11 Using One’s Face As A Security Measure 14 Impeachment Does Not Agree With Investors 17 Will Politics Every Go Away? 19 Investors Investing Carefully 22 Outlook Gloomy As Winter Settles In 1 © 2020 Spectrem Group. All Rights Reserved. Parenting and Education A lmost everyone respects the value of a good education, and that respect grows when that person is considering the education of their children. One key element of good parenting is providing all of the educational opportunities that would give their children the best chance of succeeding in life. Spectrem research shows that most wealthy people regard education as the second-most significant factor in their personal wealth creation after hard work. Most of the wealthiest people in America earned at least a bachelor’s degree in college, and many others went on to graduate degrees, law or medical degrees, or some other form of advanced educational certification. But there is a difference of opinion among parents about what type of school constitutes a quality education. Many people believe in the education provided by public schools for K-12 students, while others consider private schooling to be the way to go. Spectrem’s topic-specific study on parenting and finances shows where the divide between public and private schooling preferences lie, and it is not just a divide created by wealth. Parenting and Financial Decisions asked investors numerous questions related to the choices parents have for the education of their children, not only for elementary and secondary schooling, but also for the decision whether to go to college or technical school when their child graduates from high school. The general argument for private school is that the education is better in part because class sizes are often much smaller. No one can argue that a teacher teaching 10 kids is more effective than the same teacher working with 20 children. Private schools also have more freedom in academic curriculum because they do not need to respond to state and federal guidelines. Public schools are mandated by law to provide certain services such as transportation to and from school, special education curriculum and more school-related recreational opportunities. The cost factor and location are two other reasons people often prefer public school. While advisors do not need to involve themselves in the social factors which are involved in the private vs. public school debate for parents, the cost is a huge factor for some clients, and an advisor who can speak with knowledge about © 2020 Spectrem Group. All Rights Reserved. 2 the choices involved would be helpful. This is especially true for advisors whose clientele is primarily local; a knowledge of school systems and private school ratings as well as the cost involved would promote the relationship between advisor and client. This is especially true for clients who have multiple children. Spectrem’s research on parenting decisions explains the reality of the situation for parents is that while 37 percent of investors who do not yet have children plan to place their children in private school when the opportunity presents itself, only 27 percent of clients who have children did in fact send their children to private school. 3 © 2020 Spectrem Group. All Rights Reserved. Cost clearly is one of the defining factors in the decision to place children in private school. As net worth of the investor increases, private school enrollment for their children increases, from under 20 percent of those investors with a net worth under $1 million to approximately 40 percent of investors with a net worth over $5 million. College decisions are even more complex because there are more choices to make. There is the type of college to attend (public vs. private, academic vs. technical schooling), and the choices for funding are numerous. Advisors need to be well-aware and knowledgeable in the cost and financial details regarding 529 plans, grants, scholarships, and student loans. It is in college education funding where the balance between costs and net worth is most important to the decisions that are made. In fact, it is in spending for college that affluent investors are most likely to curtail their own spending. When asked to place on a 100-point scale the need to curtail spending in order to meet family financial demands, investors rated their curtailing methods at 33.53, and no other spending decision related to parenting had as high a number. In fact, with the exception of those investors with a net worth over $15 million, spending on college education was the No. 1 area in which investors held back financially to some degree. Top Takeaways for Advisors Education funding is a vital topic for parents, and as such, is a vital topic for advisors to be conversant about. There is no direct profit to gain from assisting clients on making these decisions, which are often just a matter of proper budgeting and applying for financial aid, but many of your client’s investment decisions will be made relative to the amount of money they spend on their children’s education. © 2020 Spectrem Group. All Rights Reserved. 4 Let’s Talk, But Not On Social Media S ocial media websites may change over time, but they are not about to leave the modern world. In days past, social media meant Myspace and Foursquare. Today, it is Facebook and Twitter. But the kids are moving on to Snapchat and What’s Ap, and who knows what other sites they use to compare and contrast the pleasures and pains of their lives. Social media is, by definition, social in nature. It connects friends and family in a way that allows communication on the time schedule of the communicator. A telephone call needs to be picked up to enable communication (voice mail ha almost completely disappeared from the communication stream). A social media post can be shared immediately and can be received when the second party chooses to check their social media pages. Social media also works as a tool for communications between consumers and corporations, mostly for the purposes of complaint. Twitter has become especially effective in allowing consumers to post complaints about corporate performance in terms of customer relations and satisfaction. But the appeal of social media as a communication tool between financial advisors and their clients is nearly non-existent. Whether it is the safety of information transmitted or the feeling that social media contact is too indirect, few investors communicate with their advisors through social media. That fact is not, however, an excuse for advisors and providers to stop providing company updates and informational investment news in social media posts. Such communication, disseminated among an advisor’s complete client list, is very often consumed by clients and used as a way to keep their investment strategies up to date. Spectrem’s annual study on the appeal of technology in advisor relations details just how limited social media is as a back-and-forth communication tool. Using Technology and Social Media in Financial Decisions also shows that there has been little growth in regard to the use of social media as a way for advisors and their clients to communicate with each other. For example, only 6 percent of all investors use Facebook to communicate with their financial advisor, and only 6 percent use LinkedIn. The Facebook results are not surprising; Facebook is seen more as a friend-to-friend vehicle than a 5 © 2020 Spectrem Group. All Rights Reserved. professional one. But LinkedIn is a website dedicated to business connections, and financial advisors are more likely to have active participation on LinkedIn, which would presumably invite greater communication with clients. Familiarity with social media plays a role, incidentally. Approximately 25 percent of Millennial investors use social media to communicate with their advisors on the three most popular sites: Facebook, Twitter and LinkedIn. While the overall use percentages are low, they have grown very slightly from two years ago, when only 2 percent of investors used Facebook to communicate with their advisor. © 2020 Spectrem Group. All Rights Reserved. 6 For comparison’s sake, the Spectrem study shows that 21 percent of all investors text their financial advisor, despite regulatory restrictions on such behavior. Texting prompts a very familiar way of communicating, but has become standard fare for people who were raised on smartphone use. Forty- four percent of Millennials habitually text their advisor, and 21 percent of Gen Xers do as well. Then again, so does 20 percent of Baby Boomers and even 17 percent of advisors from the World War II era. The ease of texting and the knowledge that everyone operates a smartphone these days may be responsible for the low use of social media as a communication device. Top Takeaways for Advisors Is feeding the social media beast a burden for financial advisors and providers? The fact that investors do not often use social media as a tool to communicate with financial advisors does not absolve advisors or providers from having to utilize social media to get key messages across to clients. Newsletters, blogs and videos are all viewed by knowledgeable investors, and they prefer to get such information from their advisors as well as from financial magazines. Some investors even judge a new advisor based on their social media presence. It perhaps indicates to younger investors that their advisor is comfortable with current technology, which makes them appear to be current with financial trends as well. Advisors who are comfortable communicating with clients via LinkedIn or Twitter should indicate so. It’s just another way to keep in touch, and may seem a bit more businesslike than inviting text conversations. 7 © 2020 Spectrem Group. All Rights Reserved. When Will You Get Around To It? H ow many times have you had a task in front of you which you knew to be a positive and necessary undertaking, but you kept putting it off? Whether it is cleaning out gutters or have tires rotated or simply having your teeth cleaned, there are so many tasks in front of us which we know we should do. But time gets in the way, as does that occasional bout of laziness. You know you are going to get around to it someday soon, but just not today. But there are matters which investors need to deal with which can be put off but should not. Many of them relate to financial issues that will crop up as your client’s approach ne end of their life, and many investors believe themselves to be years or decades away from that situation, so why deal with those matters today? Depending on your relationship with your client, it can be your job to point out the wisdom of making key financial decisions as soon as possible. There is no harm in doing it right away and there could be great harm in waiting to do it. In the Spectrem study The Final Detail, investors are asked whether they have been involved at any level with the financial aspects of a family member dying or approaching the end of life. The goal of the study is to show just how prepared, or unprepared, affluent investors are as they themselves prepare for end-of-life financial decisions. There are many examples of steps which affluent people would be wise to consider in their own end-of-life preparations for protecting and transferring their wealth. Advisors can benefit from providing direction in these areas, creating protections for assets and ease of wealth transfer down the line. For example: • Fifty-two percent of all investors have granted financial power of attorney in order to have a designated person in place should the investor become incapacitated and unable to make their own financial decisions. But, more importantly, 24 percent of investors claim they are going to grant financial power of attorney to someone in the near future. What are they waiting for? The financial power of attorney often comes into play in emergency situations, and the intention to grant financial power of attorney helps no one. Advisors should advise clients about the value of granting a financial power of attorney, noting that the client’s portfolio is at risk should anything happen that causes the investor to lose the ability to make their own decisions. © 2020 Spectrem Group. All Rights Reserved. 8 • Sixty-six percent of investors have created a will. For anyone with a sizable level of assets, the value of a will is such that it is hard to understand why that person would not go to the trouble of creating one. But 22 percent of investors said they intend to create a will in the future, and 19 percent said they have no intention of ever creating a will. That last group seems to be begging for trouble in the future, although it will be family members paying the price. • Sixty-four percent of investors have made a comprehensive list of all of the accounts they have which hold financial assets. Advisors are aware of the difficulty that sometimes comes when they ask clients to provide all of their account information for the purposes of creating a financial plan. The 21 percent of investors who say they plan to aggregate their account information into one document at some time in the future are procrastinating on a valuable asset for family members. They also need to be advised to let some trusted family member know where that comprehensive list sits in computer files or printed files. 9 © 2020 Spectrem Group. All Rights Reserved. Top Takeaways For Advisors The value to your clients in taking steps to clarify financial issues in case of severe health issues or death is obvious. It’s about clarity for other family members. The value to advisors is less obvious, but easy to understand. Many of your clients’ assets will be impacted by a change in health or mental capacity, and the relationship between an advisor and the family of a client can be complicated. Any measure that simplifies the process of making financial decisions or protects a client’s assets is beneficial to the advisor as well as to the investor. Beyond that, an advisor who expresses concern over the financial preparedness of a client is possibly going to be considered for advice or employment among those beneficiaries who deal with the financial details for a client who has been incapacitated. It sounds morbid, perhaps, but it is likely that a financial advisor knows more about the details of a client’s portfolio than any family member, including those who are granted financial power of attorney. Displaying an interest in the safety of a client’s assets in case of emergency is a discreet promotional maneuver. © 2020 Spectrem Group. All Rights Reserved. 10 Using One’s Face As A Security Measure I n modeling, the value of one’s face cannot be overstated. For many models, their face is their money-maker. The cosmetics industry is almost entirely dependent on the narcissistic nature of humans, who want to look as nice as they can when out in public, and as a result, buy creams and lotions to present the best possible face to the rest of the world. Few people are willing to go out of their home without some sort of personal grooming, and most of that grooming relates to the face. The person one sees in the mirror first thing in the morning is rarely the person the rest of the world sees all day long. Which is kind of the point when consumers consider biometric facial scans. If they believe themselves to have two faces every day, how can biometric facial scans possibly be accurate? Eyes redden, voices deepen. Even as biometrics are presumed to make transactions safer, users have questions about whether they are accurate or safe. These concerns need to be considered as financial providers consider using biometric scans to protect client accounts. At the end of the 19th century, scientists determined that fingerprint scanning could identify one human from another. Fingerprints, it came to be understood, are unique to the individual. But fingerprints can be stolen, and in some extreme cases of physical harm, can be changed. As electronic scanning technology expanded, scientists tried to determine other ways the human body is unique one from another, so that proper identification measures could be adopted. Today, it is possible to identify a person through their fingerprints, faces, irises, retinas and voices. And such biometric measures are being used by banks and some financial providers to secure accounts and assets. Wells Fargo and Bank of America, among others, have added facial or eye print recognition as ways to protect accounts accessible via apps. As your firm discusses further protections about hacking and thievery, it needs to consider how clients feel about potential security changes. And how they feel is a mixed bag of uncertainty. 11 © 2020 Spectrem Group. All Rights Reserved. This information may not change how your firm plans to move forward with security measures. It does, however, indicate that clients will need to be informed and fears quieted before they are comfortable using parts of their face as their password. As part of its monthly research with affluent investors, Spectrem routinely asks questions of current interest related to finances and economics, and this fall investors were asked about their opinions regarding biometric measures. Several different scanning mechanisms were considered, and investors were asked about their current usage and their comfort with the different forms. © 2020 Spectrem Group. All Rights Reserved. 12 Beyond fingerprints, usage is very low. But a majority of investors indicate they are familiar with the practice of such tools as retina scans and voice recognition. However, their comfort level with those scanning procedures is notably lower, and their comfort level with biometrics being used in specific situations is something very low. For example, the comfort level for voice recognition measures was only at 35 percent of all investors, compared to 63 percent who are comfortable with face recognition testing. Less than 50 percent were comfortable with different forms of eye scans. Why is there suspicion about biometrics? More than half of investors consider it an invasion of privacy, 48 percent worry about the “big brother’’ aspect of information gathering, and 39 percent aren’t certain such scanning is accurate. The same percentage (if not the same people) think their biometric information can be stolen. Advisors and providers must consider the cost of installing scanning technology and acquiring the biometric information from clients in order to use such methods to protect accounts. Top Takeaways for Advisors As with anything having to do with technological advance, young people are more likely to adapt and older people are more likely to be suspicious. But firms cannot determine to use biometric scans as protection only for those accounts belonging to Millennials and Gen Xers. They need to be able to prove to older clients that the scans can protect assets and themselves are safe from thievery or replication. Despite all the protections that exist over electronic transactions, hacking still occurs and assets are often stolen or misused. Technology continues to advance, although criminals are often one step ahead of technology. As much time needs to be spent on educating clients about your security measures as is spent installing those measures. 13 © 2020 Spectrem Group. All Rights Reserved. Impeachment Does Not Agree With Investors • Investors were surveyed during the week when impeachment proceedings against President Donald Trump reached their conclusion, and investors reacted negatively to the anticipated result. The lower index numbers came in despite the stock market continuing its steady climb to new heights, a tiny advance in the U.S.-China trade talks, and holiday sales reports coming in with positive numbers. • The SMICI fell 7 points from November to December after coming in with a 6-point increase in November. With an index of 1, the SMICI is at its lowest point in fourth months and its second-lowest rating of the calendar year. The SAICI also fell by 3 points and moved back into negative territory, where it has been for seven of 12 months in 2019. • Millionaires and non-Millionaires had completely different reactions to the news of the week, as Millionaires backed away hard from further investment in equities while non-Millionaires increased interest in individual stocks. Among Millionaires, individual stock investing fell from 34.4 percent to 26.5 percent, not only the lowest rate of increased investment for the year but the lowest since December of 2008, when the reality of the Great Recession hit hardest. Meanwhile, among non- Millionaires, individual stock investing actually rose 18.9 percent to 24.6 percent, and stock mutual fund investing rose from 23.8 to 27.1 percent. © 2020 Spectrem Group. All Rights Reserved. 14 • The category of those not investing, meaning the investors who are not going to make any additions to their investment allotment over the net month, actually dropped among both Millionaires and non-Millionaires, but investors seemed to place all of their new investing in cash, using that as a reserve position rather than an actual investment strategy. Among Millionaires, those not investing dropped from 34.4 percent to 25.0 percent, and among non- Millionaires it fell from 50.8 percent to 34.8 percent, the lowest level of non- involvement among non-Millionaires since April of 2018. • The Spectrem Household Outlook among all investors fell for the first time in fourth months, from 22.30 to 16.50. The Outlook for the economy fell back into negative territory for the fourth time in the last five months, dropping from 1.00 to -8.80. The Outlook for all four components fell among all investors, although non-Millionaires increased their Outlook for household assets from 35.25 to 40.68. The Spectrem Investor Confidence Indices survey was conducted from Dec. 12-18, 2019, when the details of the impeachment process came clear, and the vote in the House of Representatives eventually took place. The stock market did not care, as record closing highs were set in the three major indices were set frequently. But investors were paying attention, and their confidence in the markets going forward dipped significantly. The monthly SAICI tracks changes in investment sentiment among the 17 million households in America with more than $500,000 of investable assets. The SMICI reflects the investment sentiment of households with more than $1 million in investable assets. The SMICI fell from 8 to 1 in December, moving from its third-highest mark of 2019 to its second lowest in one month’s time. The SMICI had a 10-point drop from June to July this summer when trade battles with China was in the headlines every day. The SAICI fell from 1 to -2, falling back into negative territory for the seventh month of the year, and for the fourth month out of the last five. Millionaires appeared to react severely to the impeachment of a pro-business president, reducing their interest in individual stock investing and increasing their intention to invest in cash products by almost the same percentage. The continued bull market may also have made Millionaire investors wary as they consider whether the bull market can continue unabated. 15 © 2020 Spectrem Group. All Rights Reserved. Increased investing in individual stocks among Millionaires fell from 34.4 percent to 26.5 percent, while cash investing increased from 29.5 percent to 28.8 percent. At the same time, Millionaires not investing, meaning those investors who are staying on the sidelines for the coming month, dropped notably from 34.4 percent to 25.0 percent, the lowest level of non-participation among Millionaires since February of 2018. Since it appears most of that “investing” was in cash products, investors seem to be taking a reserve position rather than actively participating in the investment environment. Non-millionaires actually increased their interest in individual stock investing, with an increase from 18.9 percent to 24.6 percent. There was also an increase in stock mutual fund and cash investing among non-Millionaires. Spectrem’s Household Outlook, a measure of the long-term optimism among investors in four financial factors which impact a household’s daily life, fell for the first time in four months, from 22.30 to 16.50, but staying above the level of 8.00 reached in August, when the Outlook was at its lowest point 3 ½ years. After finally getting back to a positive number in November, the Outlook for the economy fell again into negative range at 8.80, and it has been in negative territory overall for four of the last five months. © 2020 Spectrem Group. All Rights Reserved. 16 Will Politics Every Go Away? T here was a time when the stock market was more of a concern than it is today. There was a time when international relations were a bit more problematic than they are now. But for the foreseeable future, the topic that most bothers affluent investors is the political atmosphere in America. Every month, as part of Spectrem’s Investor Confidence Indices, investors are asked one question that requires an open-ended response, and always deals with their current approach to household financial matters. In December, the question was “What is the most serious threat to achieving your household’s financial goals at this time?” The questions are asked on a rotating basis every three months. Over the past two years, politics has always been the No. 1 or No. 2 response, but in December of 2019, more than one-quarter of respondents said the political climate was the No.1 problem. At 26 percent, that response gained 3 percent over its response rate in September, the last time that question was asked. Despite signs that the economy is continuing its strong run, 16 percent of respondents pointed to the economy as the most serious threat to their financial goals. The economy is dependent in large part on the trade relationship between the United States and China, and that situation has been ongoing for several years without a complete resolution. So, what topic that might impact a household are no longer as much of a threat as they once were? The stock market continues to set records on almost a daily basis, and only 10 percent of respondents said the stock market is the greatest threat they face. When investors are segmented, it is found that Millionaires are slightly more pointed to the concerns mentioned above than investors who are not Millionaires. While there is only a 1 percent difference among Millionaires and others in terms of concern over the political climate and the stock market, 18 percent of Millionaires point to the economy as a threat to their household. It’s interesting that Millionaires feel that way based on how the economy is performing. 17 © 2020 Spectrem Group. All Rights Reserved. Just as Millionaires are more concerned than those less wealthy, retired investors are more concerned than working investors about politics (26 percent to 25 percent who see it as the most serious threat), the economy (16 percent to 14 percent) and the international situation (6 percent to 3 percent). © 2020 Spectrem Group. All Rights Reserved. 18 Investors Investing Carefully T he Spectrem Investor Confidence indices indicate how investors feel about the direction of the stock market and other investment options in the coming month. In December, Millionaire investors indicated they are avoiding additional equity investments, perhaps responding to the impeachment of President Donald Trump or the perception that the bull market will someday reach its peak and begin a slow slide. Each month, investors are asked whether they intend to maintain their current level of investing, and in December those not investing dropped significantly. However, there was a corresponding increase in cash investing among all investors, indicating that they were placing their additional investable assets in cash products as a reserve position rather than an active investing plan. Non-Millionaires, however, were very enthusiastic about participating in the rising stock market. The percentage of non-Millionaires choosing to stay on the sidelines in December dropped to its lowest level in 3 ½ years, to just 34.8 percent of investors, but they also reported an intention to increase cash investing. Here is a comparison of investing intentions as reported in the Spectrem Investor Confidence Indices for November based on specific segmentation: Millionaires vs. Non-Millionaires Millionaires backed away from individual stock investing, dropping interest in increased investing from 34.4 percent to 26.5 percent. That is the lowest level of interest in the individual stock market since December of 2008, when the Great Recession hit hardest. But Millionaires indicated an intention to increase investments elsewhere, as those not investing fell from 34.4 percent to 25.5 percent, the lowest level of non-involvement since February of 2018. So, where did Millionaires intend to put their additional assets? They increased interest in cash by almost 10 percent, from 19.5 to 28.8 percent, and nudged increases in interest in individual bond investing. Those investment trends indicate a lack of interest in equities overall. 19 © 2020 Spectrem Group. All Rights Reserved. Non-Millionaires also increased cash investing from 20.5 to 24.6 percent, and increased interest in individual stock investing from 18.9 to 24.6 percent. They also jumped stock mutual fund investing from 23.8 to 27.1 percent. Men vs. Women Female investors backed away from all forms of stock investing while increasing their interest in bond and cash investing, and cash investing interest climbed almost 8 percentage points to 26.0 percent, nearly equal to that of males (27.3 percent). While male investors backed away from individual stock investing mildly, they greatly increased interest in stock mutual fund investing from 27.1 percent to 35.7 percent. Males did back away a bit from individual bond investing, with interest in increased investing dropping from 9.6 percent to 7.1 percent, below female investing interest (11.5 percent.) Overall confidence among males increased by 2 points to 2, but fell 1 point among Millionaire males from 7 to 6. Female confidence dropped precipitously among both groups, from 3 to -8 among all investors and from 11 to -8 among Millionaire females. Republican vs. Democrat Republicans showed strong interest in participating in the rising stock market numbers in December, with an increase in individual stock and stock mutual fund investing. The increase in stock mutual fund investing went from 24.21 percent to 30.86 percent. At the same time, Republicans increased their cash investing interest almost 4 points, and those not investing fell by 14 percent, from 48.42 percent to 34.57 percent. Democrats responded in opposite fashion, pulling away from stock and stock mutual fund investing, but nearly doubled interest in cash investing, from 16.67 percent to 29.55 percent. The overall indices among Democrats fell hard, from -3 to -10 among all investors and from 13 to -10 among Millionaires, a decrease of 23 points. Republicans increased their overall index numbers, from 1 to 3 among all investors and from 4 to 16 among Millionaires. © 2020 Spectrem Group. All Rights Reserved. 20 Working vs. Retired Retired investors do not usually increase investing intentions notable from month to month, but they stated increased interest in both individual stock and stock mutual fund investing in December by approximately 5 points. In fact, retired investors expressed interest in increasing investments in all categories of products, and almost doubled interest in individual bond investing from 3.9 percent to 7.5 percent. Meanwhile, working investors dropped interest in increased individual stock investing by 5 points, from 36.6 percent to 30.3 percent, but increased cash investing interest by a corresponding 5 percent, from 23.1 percent to 28.8 percent. Both working and retired investors lowered their percentage of those not investing, and at 19.7 percent, the working investors not participating reached its lowest level since August. The overall confidence index among working investors dropped for both affluent and millionaire investors but remained in positive territory. Among retired investors, the overall confidence index rose among all investors from -10 to -8, but fell by 14 points among Millionaires from 7 to -7. 21 © 2020 Spectrem Group. All Rights Reserved. Outlook Gloomy As Winter Settles In S pectrem’s As summer and autumn turn to winter, sunlight decreases, temperatures drop and many people settle in for the gloom of the season. In December, investors expressed their own level of gloom with a reduced Outlook for the immediate future, according to Spectrem’s monthly Household Outlook. The Spectrem Outlook asks investors to judge their anticipation for four components of their household finances, and the combined ratings create the overall Outlook number. In December, that Outlook fell by almost 6 points, from 22.30 to 16.50. All four components fell among Millionaires, and non- Millionaires dropped their Outlook for three of four components, with only a more positive view for their household assets. The Spectrem Investor Confidence Indices survey was conducted from December 12-18, 2019, when the stock market indices were all climbing due to more positive talk about global trade wars and retail sales reports. At the same time, President Donald Trump faced impeachment hearings and votes in the House of Representatives, which may have colored investor response to how that might impact household finances going forward. Here is a look at the outlook regarding each component: © 2020 Spectrem Group. All Rights Reserved. 22 ECONOMY -8.80, a drop of more than 10 points from 1.60 in November After months of negative Outlook for the economy, the number moved slightly above zero in November, only to return to well below zero in December. Both Millionaires and non-Millionaires turned in negative Outlooks for the economy in December, and the decrease among non-Millionaires was by more than 13 points. Non-millionaires have had a negative Outlook for the economy for eight of the 12 months of 2019. The Investor Outlook for the economy is a clear signal that investors understand the popular economic statement that “the stock market is not the economy.” While investors are still investing vigorously in the stock market, investors do not see a corresponding positive result in the economies of their household. HOUSEHOLD ASSETS 42.40, a slight drop from 43.60 in November Non-Millionaires gave a thumbs up to their household assets Outlook in December, improving from 35.25 to 40.68. Millionaires were not feeling it, dropping their Outlook for household assets from 51.56 to 43.94. This category is an examination of how investors feel about the investment assets they have in place, and the Outlook remains positive, but events do cause investors to 23 © 2020 Spectrem Group. All Rights Reserved. raise or lower their attitudes toward investment performance accordingly. The increasing stock market improves household assets overall. Male investors and retired investors reported an increase in their Outlook for household assets in December. HOUSEHOLD INCOME 23.60, down almost 5 points from 28.40 in November The Outlook for household income fell overall for the second consecutive month. Investors across all segments reported a decrease in Outlook for household income, which might be a reaction to the end of the year, when tax considerations come into play. Working investors dropped their Outlook for household income by almost 9 points, a very significant decrease. COMPANY HEALTH 8.80, a drop of more than 6 points in November This component rarely has large moves up or down, so a decrease this large is significant. Company health reflects corporate earnings reports as well as employment decisions by the big firms in America, but jumps up or down whenever tariffs and global trade matters move. The negotiations between the United States and China turned in a small improvement in December, but the overall trade package remains uncertain. At the same time, the new NAFTA trade agreement between the U.S., Mexico and Canada appeared ready to move out of the House of Representatives, and economists are uncertain how it will actually impact American companies. © 2020 Spectrem Group. All Rights Reserved. 24 High Net Worth Insights A Spectrem Group Journal Volume 16 | Number 1 | January 2020 For more information www.spectrem.com 25 © 2020 Spectrem Group. All Rights Reserved.