Why Investors are 'Mad as Hell' ? And what you can do about it

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.Dan Richards

Last Friday, Jason Zweig of the Wall Street Journal wrote about fear and anger as the two dominant attitudes of American investors today – fear about their future and anger at those they see as responsible for the latest crisis. His column depicts many investors as intensely disillusioned, summoning up the phrase “I’m mad as hell and I’m not going to take it any more” made famous in the 1976 Oscar-winning film, Network

These worries aren’t limited to just “do it yourself” or older investors or those with modest assets – they cut across a broad range of ages and asset levels. Today’s investor psyche has fundamental implications that will require changes in how you interact with clients.  Before getting into how to respond, let’s look at what’s driving today’s mindset.

Why investors are afraid

In his article, Zweig pointed to three things that cause fear among investors:

Their finances

In a recent survey, 73% of Americans said they “worried about money” during the previous day, up from 56% in March of 2009, when there was serious talk of a global meltdown and another depression.  Indicative of this anxiety was a recent New York Times article on dollar stores which pointed to a “new consumerism” (i.e., thrift) among the affluent, as households with incomes over $70,000 today make up almost 25% of dollar-store customers and are the fastest growing segment of shoppers.

Their future

Nearly six in 10 Americans say that the latest market downturn will limit the opportunities to pursue their future objectives.  And only 11% say they have “strong or very strong control of their financial lives,” down from 17% in March of 2009.

The way ahead for the United States

Over half of Americans are moderately or very fearful about the future of the United States. These fears aren’t new – even before the events of 2008, surveys showed the current generation of Americans to be the first on record unsure about whether their children would be better off than they are.

Continued uncertainty about house prices and unemployment has only made these fears worse – and the downgrade of US debt and extensive media coverage about the deficit and debt ceiling have also contributed to this anxiety.