When it comes to taking a risk, most U.S. adults prefer to play it safe, according to the latest findings from Northwestern Mutual’s 2019 Planning & Progress Study.
Since 2009, the annual research study has examined U.S. adults’ attitudes and behaviors toward money, financial decision making and the broader issues impacting people’s long-term financial security.
The Harris Poll conducted this year’s annual study on behalf of Northwestern Mutual by surveying 2,003 adults ages 18 and older.
The study found less than half of American investors were comfortable with taking financial risks in order to realize financial returns, with nearly a third (30%) having an extremely low financial risk tolerance, versus 14% of risk takers at the opposite end of the spectrum having a high degree of risk tolerance.
Respondents most comfortable with financial risk were those who self-identified as disciplined planners. Following close behind these high-level risk takers were respondents with an investment goal in place, but not necessarily a formal plan to achieve it.
The study found that the difference between the two financial risk takers was the professional advice of a financial planner. Respondents who said they had a financial planner advising them in making investments had a risk tolerance of 5.3 out of 10, while those who said they did not have a financial advisor had a risk tolerance of 4.6 out of 10.
The study’s findings weren’t limited to finances. Americans who are risk averse to investing are more inclined to play it safe across many other areas of their lives including their careers, where they chose to live, the activities they pursue and their social lives.
"The instinct to preserve and protect is evident in these numbers, and while that's a positive and healthy tendency, it's also possible to be overly cautious due to uncertainty," says Emily Holbrook, senior director of planning at Northwestern Mutual. "The takeaway here is that getting the right financial guidance can give you clarity to take calculated risks."
Founded in 1857, The Northwestern Mutual Life Insurance Company, known as Northwestern Mutual, is headquartered in Milwaukee.