New survey finds investors’ efforts to sidestep risk may leave
them susceptible to other financial mistakes
MINNEAPOLIS–(BUSINESS WIRE)–Ameriprise Financial (NYSE: AMP), today unveiled new research on how
U.S. investors perceive financial risk and how those feelings shape
investment decision-making. The Financial Risks & Investor Attitudes study
uncovered that a vast majority of respondents (73%) tend to avoid risk
entirely or weigh risk very carefully when engaging in financial
decisions. With the recent market volatility as a backdrop, these
respondents admit that by taking a more proactive role in their
financial education and investing strategies, they could better
understand and embrace a level of financial risk that could potentially
benefit their portfolios.
“Investing for the long-term, while also trying to navigate market
swings, is one of the biggest challenges facing investors,” says Marcy
Keckler, vice president of Financial Advice Strategy at Ameriprise.
“Whether you are an experienced investor or beginning to build your
retirement nest egg, having a comprehensive financial plan and
understanding how risk factors into your plan can help build financial
The Financial Risks & Investor Attitudes study surveyed 3,000
Americans between the ages of 25-70. Respondents ranged from millennials
with at least $25,000 in investable assets to Gen Xers and baby boomers
with at least $100,000 in investable assets. The findings uncovered four
unique profiles within financial risk—ranging from those who dodge risk
at all costs, to those who fully embrace risky decisions.
Exploring Financial Risk:
Risk Avoider (31% of investors surveyed)
At one end of the
investor risk spectrum are Risk Avoiders, who are the most guarded when
it comes to financial risk-taking, with 89% of this group viewing their
outlook on risk as “cautious.” While nearly half (42%) of respondents in
this profile claim they are not willing to take risks with their
finances, many are increasing their exposure to risk unknowingly. The
study found many people in this group report being underinsured, only
make investments with guaranteed returns, and some are storing their
savings in cash. This group is also less likely to conduct the research
necessary to help mitigate risk. The majority of Risk Avoiders are baby
boomers and female (61%).
Risk Mitigator (42% of investors surveyed)
are careful about risk but less so than Risk Avoiders. Investors in this
profile characterize themselves as willing to take risks after
significant research (89%), but also associate risk with loss or
uncertainty in their investment outlook. Risk Mitigators are more
engaged in actions such as diversifying investments and being
sufficiently covered by health and life insurance. However, they remain
uncertain about their approach to investing and risk. Risk Mitigators
prefer low-risk investments and shift to conservative choices during
periods of market volatility – decisions that may not always be in their
best interest. Demographics in this group are fairly evenly split
between millennials, Gen X, baby boomers, and gender.
Risk Manager (25% of investors surveyed)
Risk Managers have
a more confident view of risk, with all of these individuals (100%)
associating financial risk as an opportunity. Consumers who fit this
profile are willing to take informed risks after conducting research and
focus on growing their retirement savings through investing. They pursue
well-thought-out risk mitigation strategies, such as assessing financial
decisions along with diversifying and balancing investments. Nearly half
(45%) of Risk Managers invest heavily in the stock market and the
majority report understanding the details of their 401(k) plans. Risk
Managers are predominately male (61%) and are represented equally across
the three generations surveyed.
Risk Embracer (3% of investors surveyed)
At the other end of
the spectrum, Risk Embracers are highly motivated investors, many of
whom associate financial risk with “excitement” (39%). A majority of
investors (64%) in this profile characterize themselves as “real risk
seekers,” with 76% indicating that they are willing to make high risk
and high return investments. This group also admits they are more
willing than their peers to take risks in other areas of life such as
borrowing too much when buying a house, or making a career change with
less financial security. While 53% of respondents in this group consider
themselves knowledgeable about investing, they are primarily focused on
growing their investments versus employing mitigation strategies to
protect assets. The majority of Risk Embracers tend to be millennials
(56%) and male (67%).
“Evaluating and managing risk is a balancing act, and it’s complex,”
says Keckler. “Working with a financial advisor who can help you
identify and appropriately manage risk makes sense regardless of your
level of investment experience.”
For more information about the Financial Risk & Investor Attitudes study,
please visit our research page at ameriprise.com/financialriskstudy.
About the survey
The Financial Risks & Investor Attitudes
study was created by Ameriprise Financial utilizing survey responses
from 3,000 Americans ages 25 to 70 with at least $25,000 in investable
assets. The online survey was commissioned by Ameriprise Financial,
Inc., and conducted by Artemis Strategy Group from June 16 – July 3.
About Artemis Strategy Group
Artemis Strategy Group (www.Artemissg.com)
is a communications strategy research firm specializing in brand
positioning, thought leadership and policy issues.
About Ameriprise Financial
At Ameriprise Financial, we have
been helping people feel confident about their financial future for more
than 120 years. With extensive asset management, advisory and insurance
capabilities and a nationwide network of approximately 10,000 financial
advisors, we have the strength and expertise to serve the full range of
individual and institutional investors’ financial needs. For more
information, or to find an Ameriprise financial advisor, visit ameriprise.com.
For further information and detail about the Financial Risks &
Investor Attitudes study including verification of data
that may not be published as part of this report, please contact
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
Investment advisory products and services are made available through
Ameriprise Financial Services, Inc., a registered investment adviser.
© 2015 Ameriprise Financial, Inc. All rights reserved.
Ameriprise Financial, Inc.
Jennifer Johnson, 612-671-7188