The measure of affluent investor optimism jumped in July to 45% from 36% in June. The Mendelsohn Affluent Barometer measures the sentiment of investors with $100,000 or more in annual household income.
This Website Is For Financial Professionals Only
The low reading in June was the result of prevailing disappointment in employment growth and other economic indicators. But with the rebound in economic activity in July, affluent optimism followed right along.
Europe’s seeming inability to solve its economic woes along with the upcoming presidential election and Congressional stalemate over the pending fiscal cliff have given affluent investors much to worry about.
The Mendelsohn Affluent Barometer survey asked affluent investors if they expected to one day be in the infamous 1%. Most said no because they think it would take a minimum of $1.4 million in annual income to merit that unpopular honor.
In reality, it only takes $325,000 in annual income to become part of the 1%. This is based on the 2011 Census Bureau’s Current Population Survey.
But even those who qualify don’t feel very affluent. Even those with $250,000 in annual income—those who would qualify as ultra-affluent—feel only moderately affluent. They also believe they are among the top 21% of the wealthy, not the 1%.
The economic uncertainty both in the US and abroad has had an inordinate impact
on how investors feel they stand in the wealth hierarchy. When we work with them, keeping this in mind will help us form better relationships and better manage what may be our own prejudices against the wealthy.