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Well Fargo Sees Investor Optimism at 17-Year High

March 29, 2018

Despite market volatility in the first quarter, investors remain significantly more optimistic than they were a year ago, according to a recent poll conducted by Wells Fargo and Gallup. But advisors may want to revisit their clients’ financial plans in light of recent tax changes.

Investors are particularly optimistic about their ability to maintain their household income over the next 12 months as well as reaching their five-year investing goals, with 71% saying they’re at least somewhat optimistic about both, according to the survey of 1,321 investors aged 18 and over with household savings and investments of $10,000 or more conducted in February. Sixty percent of investors are at least somewhat optimistic about the 12-month outlook for economic growth, unemployment and market performance, the survey found. Only 45% of respondents say they’re “very” or “somewhat concerned” about the recent volatility, compared to 53% who said so in 2015 and 64% in 2016, according to the poll. Fifty-two percent, meanwhile, say they’re “not too concerned” or “not at all concerned” about the recent volatility.

Furthermore, 49% of respondents say they have “quite a lot” or “a great deal” of confidence when it comes to saving and investing for retirement in the stock market, compared to 36% in February 2016. Inflation, however, is a cause for concern: only 40% are at least somewhat optimistic and 34% are at least somewhat pessimistic, Wells Fargo and Gallup found.

Nonetheless, investor optimism remains at a 17-year high and essentially unchanged for the past two quarters, according to the poll. The investor optimism index was at +139 in the first quarter of 2018, compared to +126 a year ago and +147 in September 2000.

On the other hand, financial advisors may want to talk to their clients about taking advantage of recent tax law changes.


“Today’s low tax rates may make saving in after-tax investments such as Roth IRAs or Roth 401(k) plans a better choice for some investors than focusing exclusively on pre-tax investments like a traditional 401(k) or IRA,” Joe Ready, head of Wells Fargo Institutional Retirement and Trust, says in a statement. “This is using the assumption that an investor’s personal income tax rate may be higher by the time they retire.”

Fifty-seven percent of investors say their strategy isn’t going to change when asked whether they’re more likely to save for retirement through pre-tax or after-tax investments, the survey found.

By Alex Padalka