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Majority of Investors Want A Balance of Growth & Protection

Allianz Life Insurance Company recently performed a survey of Americans aged 25 and older who have at least $200,000 in investable assets.  The Allianz Life 2013 Investor Market Perceptions study offers the financial industry great insight into what investors see in the market and what product features appeal to them.  The company press release was published through Enhanced Online News.  Overall, investors want a balanced approach and they are willing to give up some growth potential for some principal protection.  Those in the annuity industry have been developing products and riders for years to appeal to this consumer need and the Allianz Life survey only solidifies previous research.

Of those surveyed, 95% say that they are looking for complete principal protection or at least some principal protection with their investments.  The survey also found that 76% of these investors would rather have up to a 10% potential growth balanced with the same percentage of protection against losses.  They would much rather have this than a product that has unlimited growth potential, but comes with unlimited potential losses as well.  Even though the overall stock market has increased significantly over the past 4 years, 79% of people think the market will remain volatile and 59% worry that this volatility will affect their retirement.  The 2008 financial crisis still worries investors and the current low returns call for a product that offers good market upside potential along with principal protection.  Fears about a volatile market transcended age as the majority of all age groups studied listed this as a fear.

Market volatility worries are one of the main reasons that people are holding more investments in cash.  The survey found that 38% of investors are not investing idle cash because they are worried they will lose it.  Wealthier investors were asked what they would do with $20,000 in idle cash.  Sixty-three percent of them said they would like to invest it in a product that balances loss protection with growth potential.  Three times fewer people said that they would invest the money in a product that had high growth potential.  Only 11% of respondents said they would just hold the money until the market was more stable.  Investors are nervous about the markets, but don’t want to hold their money in cash.  They are looking for products that offer growth potential with principal protection and many annuities fit that bill.

One of the most important findings was when investors were asked whether they would rather have a product with a 4% return that has a guarantee to maintain its value or a product that offers an 8% return but could lose value.  Seventy-two percent of people that work with a financial expert said they would choose the 4% return product and 70% of everyone else chose the same product.  It is pretty clear what the majority of investors are looking for right now in terms of a balanced product.  Those offering such products need to continue with their innovation and give consumers what they demand.

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