There’s a general view that the affluent were immune to the financial effects of the pandemic, but a recent survey conducted by Natixis Investment Managers shows that this isn’t necessarily the case. Although the majority of those surveyed with $100,000 or more in investible assets — 54% — said the pandemic did not impact their finances, there were many affluent investors who did experience a financial setback related to the COVID-19 pandemic.
How the Pandemic Affected the Finances of the Affluent
Among the affluent investors surveyed, 9% said they lost their job or business for at least part of the year, 25% said they lost personal or household income during the pandemic, and 19% say they were forced to tap personal savings and other assets to make up ground. Overall, almost one-fifth said they experienced a setback to their financial security.
“If you think about the way that [affluent investors] can have a setback, that’s a telling point,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight. “One part of that could be that they may have been sick, they may have lost income themselves. They may have had to take care of someone who was ill and had to step back from work for a while to do that. Another part is being the providing person to adult children or a parent who was having the worst effects of this. There are a lot of ways they could feel a financial impact that’s not related to their income.”
Get Started Now: What Should Your Post-Pandemic Savings Strategy Be?
Another possible way the pandemic could have affected the finances of affluent investors is the influence it had on their investment decisions.
“A lot of people — about 29% — told us that one of the lessons they learned out of this particular experience was that they weren’t going to back emotional investment decisions,” Goodsell said. “If you look back to March of last year when the markets dove down quickly, a lot of people may have stepped back from what they were doing, pulled out of the market, and then they would have lost out on the opportunity of coming back. That may be part of it as well, why they feel that way, why they say they felt a financial impact. It’s not just about not being able to go to work or having their business shut down — there’s a lot of extenuating pieces that could result in people saying they felt that.”
Affluent Investors Say They Are Still Stressed
The Natixis survey found that “after living through a global public health crisis like no other seen in a century, about half of those surveyed (49%) report that they are stressed. Another 42% say they are fearful and 40% still say they are vulnerable.”
The survey found that the biggest personal financial stressors for affluent investors are having a large unexpected expense (35%), taxes (27%), healthcare costs (27%), maintaining their standard of living (26%) and job security (25%).
The Pandemic Taught the Affluent To Go Back To Basics
The survey asked affluent investors about the biggest personal finance and investment lessons they learned over the past year, and top responses include “keeping my spending in check” (43%), “having an emergency savings account” (30%) and “avoiding emotional investing decisions” (29%).
“I thought it was very interesting that the top two financial lessons that these individuals learned during this period — No. 1, keep my spending in check, and No. 2, have emergency savings — are very fundamental financial planning lessons you would teach to your son or daughter as they’re going out into their first apartment or something like that,” Goodsell said. “Even if they didn’t feel those significant setbacks, that’s the kind of stuff that has people stressed. They’re going back and reconnecting with their planner — ‘Am I doing the right thing?’ ‘Am I following through with these pieces?’ And we did see a number of people who were worried about keeping their spending in check. That tended to be more people with $100,000 to $300,000 in assets. That was about half of their stress.”
Although the pandemic was an incredibly stressful time on multiple levels, it did teach important financial lessons that apply to everyone — affluent or not.
“When I look at it, this tells the story that this was a period when people learned lessons,” Goodsell said. “Maybe they didn’t have the savings they wanted or maybe they were spending too much, and that’s part of that stress that comes with it.”
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Last updated: Aug. 2, 2021