Schwab Survey Says Age Brings Financial Confidence

These are interesting times in which to be a registered investment advisor. Seemingly nary a day passes without a report or survey highlighting clients and investors feelings about the economy, markets and their personal financial confidence.

What makes all that interesting is the sheer variety of conflicting data. Some surveys indicate high degrees of pessimism while others confirm the opposite. Other are somewhere in the middle. Since economics and money are personal issues, advisors would do well to acknowledge that the feelings of their clients likely run the gamut from exceptionally positive to downright gloomy to something in the middle. There’s nothing wrong with that.

On the brighter side of the ledger, Schwab’s eighth annual Modern Wealth Survey indicates six in 10 of those polled are feeling confident about reaching their financial objectives. For advisors, that’s important for multiple reasons. First, that confidence suggests investors are more willing to not leave anything to chance and are more likely to work with advisors.

Second, there are demographic considerations to be gleaned from the survey. Namely, the older a client, the more likely they’re confident about finances.

Stocks Supporting Optimism

For advisors that want the breakdown about financial confidence and age, here’s the data courtesy of the Schwab.

“This optimism is most pronounced among Boomers, with 66% believing they are more or as likely as older generations to reach their goals. However, every generation surveyed showed a similar level of confidence when asked to compare themselves to previous generations—Gen X (63%), Millennials (62%) and Gen Z (60%),” according to Schwab.

Not surprisingly, much of that ebullience is buoyed by the upside being accrued by risk assets, i.e. equities. For all of the concerns, valid at that, about high interest rates and inflation, stocks are performing admirably and have been doing so since the end of the 2022 bear market.

“One factor likely driving this positivity is a surge in the number of Americans investing in the stock market,” adds Schwab. “Schwab’s survey shows that almost three in five Americans (58%) are investing today, in line with recent Federal Reserve data that shows the same proportion of American households that own stocks—either in mutual funds, retirement accounts, or as individual shares. The Federal Reserve data is up from 53% in 2019 and the highest on record.”

Access Supports Confidence

Another element in clients’ confidence that advisors should be aware of is that those good vibes are support by access and choice, particularly among younger investors. Translation: restrictive approaches aren’t going to fly and younger clients are likely to desire the presentation of myriad choices.

There’s credibility in this line of thinking because it’s simple fact that Gen Z has more avenues through which to build wealth and access different asset classes than boomers and or Gen X did at the same age.

“In fact, when asked why they are in better financial shape than previous generations, the Schwab survey indicates that Americans believe they have more ways to build wealth (50%), increased accessibility to investing (46%) and additional investment options available to them (46%),” concludes Schwab. “Among Gen Z in particular, the top reason for increased financial confidence is improved access to investing.”

Related: Even Self-Directed Investors Want Advice