Affluent Investors’ Faith in Financial Institutions Stirred but not Completely Shaken Amid Market Concerns

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Three Quarters Demand Greater Transparency and More Than Half Look for More Comprehensive Solutions, PNC Survey Finds

These results clearly tell us that most wealthy investors are willing to listen to a provider who has a better story...They want someone to help them. But whoever helps them is going to have to work.

Nearly half of affluent investors are comfortable with their own financial situations but are more pessimistic about the outlook for the U.S. economy and the stock market during the next six months, according to survey findings by PNC Wealth Management, a member of The PNC Financial Services Group, Inc. (NYSE: PNC).

While 47 percent are optimistic and just 16 percent pessimistic about their own investment decisions as reflected in their portfolios, one-third (34 percent) are negative about the prospects of the stock market and 57 percent have a gloomy outlook for the economy in the next six months. Their mood is significantly darker than a year ago when just 47 percent had a negative outlook heading into 2010.

Yet according to the seventh annual Wealth and Values Survey Investors’ Outlook, the wealthy are ambivalent about the results provided them by their financial institutions during the market upheaval.

Asked to assign a letter grade to their financial institution, 44 percent give a “C”, saying they “didn’t make much of a difference one way or another.” Meanwhile, 31 percent responded with a “B”, saying “they helped some but could have done more.” Only one in 10 (11 percent) feel their financial institution’s actions were personally harmful in some respect and rate it either a “D” or an “F”. Just 15 percent said their advisors “really made a huge positive difference,” or an “A”, according to the survey of 1,097 affluent individuals, all of whom have at least $500,000 in investible assets.

“This should serve as a wake-up call in the financial advisory business,” said Thomas P. Melcher, executive vice president and managing director of Hawthorn, the division of PNC Wealth Management that serves clients with $20 million or more in investable assets. “These results clearly tell us that most wealthy investors are willing to listen to a provider who has a better story and that managing wealth is more than managing their investments. They want someone to help them. But whoever helps them is going to have to work.”

The survey indicated that three quarters (74 percent) also expect greater transparency from their financial institutions and more than half (57 percent) want more comprehensive wealth management solutions, while 43 percent are looking for more attention from their financial advisors.

The Wealth and Values Survey by PNC, which is among the nation’s top 20 wealth management firms, also revealed insights about the following issues:

  • Market Fears: The impact of the stock market volatility is palpable, as half of affluent Americans (48 percent) indicate they remain more apprehensive about investing than they were before the recession, while only 7 percent express greater confidence than before. The largest proportion – 44 percent, up from 32 percent last year – assert that the recession has not affected their investing approach. Yet they continue to be more optimistic about their personal portfolios, with almost half (47 percent) optimistic and fewer than two in 10 (16 percent) pessimistic.
  • Risk Tolerance: Investors’ taste for risk has changed little in the last year. Most affluent Americans (42 percent) describe themselves as seeking balance between growth and stability in their investing; the one-quarter (23 percent) who describe themselves as more conservative is identical to the proportion describing themselves that way a year ago.
  • Asset allocation models: More than half (54 percent) remain confident in current asset allocation models, while nearly one-third (30 percent) are uncertain about that approach to investing. However 15 percent believe that “these models haven’t worked and new models are needed.”

An online media kit containing survey highlights and background information are available on PNC’s website at http://www.pnc.com/go/presskits.

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Alan Aldinger

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