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Affluent Investors’ Apparent Calm in the Storm

Phoenix Marketing International (PMI) just released its Wealth & Affluent Monitor’s Investment Outlook findings for June. It shows the percentages of investors in the mass affluent and HNW market segments that say they plan either to increase their investments, decrease them or stand pat in the following three months. 

Given the dramatic spike in market volatility and ongoing economic uncertainty, one might expect there to be some significant recent moves into and out of the market by investors. Generally, however, the PMI data for mass affluent and HNW investors does not reflect this assumption. Rather, mass affluent investors largely stayed their longer-term course while HNW investors showed a stronger propensity to buy low and sell high. 

Mass Affluent Investors Stay Steady

Mass Affluent

The chart above tracks investment move expectations for the Mass Affluent segment (IPA $250K to $999K) each month for the trailing 12 months ending in June 2020. After a slight uptick in buying expectations in February, as the market dropped, and in selling expectations in April, as the market began to recover, expectations have tended to stay within recent historic ranges throughout the Pandemic. 

HNW Investors Take Advantage of Buying and Selling Opportunities 
The reaction to pandemic-driven market volatility by the HNW segment (IPA > $1MM) was more pronounced as the chart below shows. This group seemed to take the initial market decline in February and March as a buying opportunity as expectations to increase investments spiked while intent to decrease investments dropped to yearly lows. By June, the buying opportunity was perceived to have passed and expectations returned to more normal levels.

In hindsight, both sets of investors, given their respective wealth levels and presumed tolerances for risk, seem to have responded rationally to this recent Black Swan event. This may be a testament to investors growing market awareness or, more likely, to the guidance of their advisors in avoiding irrational investment decisions. 

High Net Worth

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