Bull Market Reality Check: Investors Seek Greater Return but Less Risk


NEW YORK (MainStreet) — Americans are riding a galloping five-year bull market that has provided beefy triple-digit cumulative returns -- and still some investors are disappointed. Three-quarters of affluent investors surveyed by AssetMark, a consultancy to financial advisors, expect portfolio returns of about 12% this year, even though the S&P 500 has provided an average return of 7.7% over the last ten years.

"Our research indicates that too many investors overestimate their ability to cope with significant losses," said Charles Goldman, president and CEO of AssetMark. "Nearly half of the study respondents said they would risk 25% to 100% of their portfolios for commensurate returns. Given the relatively recent memory of 2008, this is surprising."

Nearly all (90%) of those surveyed said portfolio growth was a primary objective, yet more than two-thirds (68%) admitted they were more concerned about the safety of their investments than about maximizing their returns.

With investable assets between $250,000 and $1 million, these affluent investors (95%) claim that they are in the market "for the long haul," but more than half (58%) want their advisors to change their investments frequently in response to shifting market conditions.

"We found that investors expect more from their portfolios than is realistic and this can cause some dissatisfaction," said Zoë Brunson, AssetMark's director of investment strategies. "For instance, investors reported that the size of their portfolio, on average, had increased 14.2% in the last year and nearly half (48%) were not happy with their 2014 returns YTD."

About half (46%) of the respondents said they would risk 25% to 100% of their portfolio for proportionate returns, while claiming to be moderate - (69%) or low-risk (19%) investors.

For advisors working to meet the out-sized expectations of their clients, the job can be a thankless one. While investors reported being "generally satisfied" with their financial advisors, more than one-third (37%) admitted talking with their advisors was a chore they did not enjoy.

--Written by Hal M. Bundrick for MainStreet

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