The market and the economy were the two other concerns most often cited. It's worth noting that while nearly half of the respondents thought the bear market was going to be with us for a while, and a slightly smaller percentage were worried about an economic "double dip," only 2.4% were very concerned about the possibility of a stock market crash.
Toward the bottom of the list of concerns were Social Security and a war with Iraq. The low rankings don't mean that the affluent were unconcerned or oblivious about these issues; they simply didn't believe that they would have much of an impact on their investments.
Whence The Market?
We then asked our respondents a far narrower question: Will the stock market go up or down in 2003? The answer was a dead heat, with 39% saying it would go up and the same percentage expecting it to go down. The other 22% thought that the stock market would pretty much hold its ground.
These percentages stand in contrast to those of a similar study conducted in the latter part of September 2001. Back then, with the attack of September 11 still very much in the news, we asked the same question of 417 investors with more than $1 million in investable assets. While just 2.4% thought the stock market had hit bottom, 74.3% nonetheless thought it would go up in 2002 and 89.4% said they didn't expect to see double-digit growth for several years.
In last year's study and this year's, there was one constant: Clients who were more regularly contacted by their advisors in person or over the phone were uniformly more optimistic about the market, the economy and their relationships with their advisors.
Looking Ahead-And Beyond
Finally, we asked the investors what they were most optimistic about both in 2003 and three to five years from now. (Note that in this exhibit, the higher the percentage, the more optimistic the investors are.) The good news was that, without exception, their outlook for the longer term was more positive than it was for 2003, in some cases dramatically so.
The issue they were least confident about was the state of the financial and investment markets, with no one expecting much in 2003. The respondents were similarly downbeat about the U.S. economy as a whole; even in the longer term, only about one in five was optimistic. And they were particularly pessimistic about their retirement plans. That may be because this is an older group of people, by and large, for whom retirement is nearer. Or it could simply be because they have almost certainly seen the value of their investments shrink of late, possibly obliging them to pare their retirement plans.
While there was concern in 2003 for regulatory agency activity and corporate reporting, the respondents were confident that those issues would be sorted out in the longer term.