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Optimism Sprouts in CFP Investor Study

Optimism Sprouts in CFP Investor Study

Today’s survey by the CFP Board of Standards examining investor attitudes covers a lot of ground that the Employee Benefit Research Institute went over in their annual retirement poll on Tuesday. Forty-nine percent of respondents told CFP they’re worried about their retirement savings, for example, (see chart below) and 44 percent don’t feel any better about their financial security than they did a year ago.

But optimism about the future reared its lovely head in today’s numbers.

A full 51 percent were “more positive” about their financial situation a year from now, while just 9 percent were “more negative.” Interestingly, optimism skews along race and political lines.

Seventy-nine percent of blacks and 76 percent of Hispanics believe their financial situation will improve over the next year, compared to 43 percent of whites. And liberals and moderates were more inclined to feel better about their prospects (62 percent and 55 percent respectively) than conservatives (44 percent.)

CFP Chief Executive Kevin Keller said the race variation may have resulted from minorities entering the financial crisis earlier and feeling it worse than whites. Three years later, “They’ve moved through the issues and perhaps are more optimistic about the future,” he said.

And the variations by political affinity? “The numbers are what they are,” Keller said. “It could very well be a function of the general tone and tenor of the debate that’s taking place.”

The greater optimism among racial minorities may reflect a broader demographic shift in the country as minorities make up a larger portion of the American population, said Lazetta Rainey Braxton, an African-American financial advisor and owner of Financial Fountains, a fee-only, state-registered RIA in Chicago for middle-income clients.

She doesn’t discount higher rates of joblessness that minorities experience today. But there’s a sense that they have more opportunities now than in the past, given changes they’ve seen in everyday life, she said—such as a black president in the White House and a Hispanic on the U.S. Supreme Court. With more opportunities comes more income, “and hopefully income can turn into wealth,” Braxton said.

Speaking to the trend of broader optimism, Braxton said investors are changing the things they can change following the financial crisis—their own savings, spending and credit habits—and are feeling better about the results.

“It takes a shock to the system, like this most recent financial crisis, for people to change,” she said. “They’re embracing it as much as they can, and the optimism comes from their feeling empowered to find tangible ways to improve their financial well-being.”

The CFP telephone survey polled 1,000 Americans across broad income ranges on March 1-4.


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