A majority of investors polled say the economy is in strong shape but most also think that the US stock market is "peaking", with several thinking a recession is on the cards next year or soon thereafter.

Investors in the US are not as upbeat as they were a year ago about hitting financial goals for the next 12 months and five years, suggesting that recent financial market turbulence and worries about a possible economic slowdown are dampening the mood.

The Wells Fargo/Gallup Investor and Retirement Optimism Index dropped to 85 points for the second quarter 2019, down by 18 points from 103 a year ago. The index measures US investor confidence, based on a sample of US adults with $10,000 or more invested in stocks, bonds or mutual funds. More than half of investors - 61 per cent - say the stock market’s recent performance makes them concerned that the market is “peaking.” The latest poll was conducted between May 6 and 12 among a total of 1,240 people. (While not exclusively from the mass affluent or high net worth end of the spectrum, the results may be indicative for wealth managers.)

These studies explain why a big task for wealth managers is managing clients’ expectations about how much money they will make and have to retire on, a point that applies even with clients sitting on much higher asset pots than those surveyed. 

More than half of investors (61 per cent) describe the economy as “booming” or “solid,” but there are concerns that a recession is nearing: 51 per cent of investors say a recession will begin either later in 2019 (11 per cent) or in 2020 (40 per cent). 

Some 66 per cent of respondents to the polls said that they are prepared for handling their investments in the event of a recession. This includes 72 per cent of retirees and 64 per cent of non-retirees.

The poll found a gender gap in planning for the working years: 52 per cent of men versus 38 per cent of women say they have given “a lot” or “a fair amount” of thought since the start of their working years to how they would achieve their work, financial, family and lifestyle goals during this phase of life. By contrast, there is no significant difference between men and women in planning for retirement, with 77 per cent of men and 73 per cent of women giving it considerable thought.

A good time to invest, but not to spend
Nearly two in three investors (65 per cent) say that now is a good time to invest in the financial markets, consistent with the 64 per cent to 68 per cent range seen in the poll since the start of 2018. About half (53 per cent) say the rise in markets makes them feel more confident about their retirement savings. Yet fewer than half report that the rise in markets makes them feel more confident about spending more money (44 per cent) or making major purchases (40 per cent).

Investors as a whole report having an average 44 per cent of their savings invested in stocks. When asked to think ahead to their portfolio at age 80, investors estimate they will have just 26 per cent invested in stocks at that time. 

A few weeks ago, the State Street Investor Confidence Index®, which tracks the actual buying and selling actions of investors – rather than what they tell pollsters – found that the index increased to 79.5, up by 6.6 points from April’s revised reading of 72.9. Confidence among North American and European investors improved, with the North American ICI rising from 71.3 to 76.7, and the European ICI rising from 86.6 to 92.5. By contrast, the Asia ICI dropped by 4.2 points to 88.4.