High Net Worth Investors Cautiously Optimistic

According to the results of two recent surveys, many high net worth investors are looking to take advantage of the opportunity provided by recent downturns in the global stock market.

shutterstock_121062763The first relevant study comes from financial consultants at the deVere Group. In a poll of almost 800 high net worth individuals from around the world, deVere researchers found 76 percent of them intended to increase their investments in 2016. Only 14 percent of respondents said they did not plan to do any further investing.

“The results of this poll clearly show high-net-worth individuals now have a strong appetite to use the cash that they have held in reserve to top up and diversify their investment portfolios,” deVere Group founder and Chief Executive Nigel Green said, according to WealthManagement.com. “It would appear that many high-net-worth individuals kept their powder dry during 2015, as the markets rose then fell and as we braced ourselves for the first Fed rate hike in almost a decade. But any qualms they might have had last year are now countered by more attractive prices.”

“Life insurance becomes a more attractive investment in an uncertain economy.”

Based on speculation by Green and others, the most likely reason behind this surge in confidence is the widespread belief that markets have gone about as low as they will get in recent months. That sets the stage for excellent deals on stocks as well as other financial products. Life insurance, which is closely tied to the performance of the international stock market, could also seem like a more attractive investment given the current economic climate. As conditions improve, interest rates are likely to rise, setting the stage for favorable returns no matter what type of investment high net worth individuals have in their portfolios.

Staying safe from market turmoil

That opinion might vary depending on who is asked, however. Another survey conducted by Morgan Stanley on high net worth investors in Houston found much more bearish attitudes in the Lone Star State. According to the poll, 29 percent of well-heeled Houstonians see the local economy as worse off than it was less than a year ago. Much of that sentiment comes from the current low price of oil, which led 85 percent of survey respondents to estimate a negative impact on the economy.

Of course, being the oil-trading capital of the world, Houston’s exposure to this market is clearly going to make its residents nervous right now. Luckily, according to Morgan Stanley’s Matt Kabot, who spoke with the Houston Chronicle about the survey, investors aren’t reacting rashly to the economic downturn. The primary focus for high net worth investors remains diversification.

In the same way that investors should diversify their stocks and bonds, it’s also vital to make sure their life insurance strategy is equally flexible. LifeHealthPro explained the value of a diversified life insurance portfolio that accounts for various types of risk as well as the potential for medium-term market gains. Term life insurance plans can provide reliable protection for gaps in coverage, providing assistance to family members during critical times in their lives if needed. Indexed universal life insurance plans, on the other hand, can help investors achieve balance between long-term protection and short-term gains from a favorable stock market.

Every client will require a different mixture of products to suit their needs, but having a diverse life insurance plan can help defeat pessimism brought on by an uncertain economy.

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Highland Capital Brokerage is committed to developing client-focused relationships with financial advisors using our core competencies of life insurance, annuities, and long-term care. We distinguish ourselves by providing point-of-sale support, advanced marketing, and creative estate and business planning techniques.
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