SOURCE: Spectrem Group

Spectrem Group

January 22, 2014 08:00 ET

New Spectrem Study Highlights 2014 Investment Trends and Considerations Among Mass Affluent, Millionaire and Ultra High Net Individuals

Reveals That Key Investment Priorities for 2014 Will Remain Similar to 2013; Mass Affluent Investors Continue to Lag Other Groups in Equity Exposure

CHICAGO, IL--(Marketwired - Jan 22, 2014) -  According to Spectrem's fourth quarter wealth segmentation report, Asset Allocation, Product Ownership and Perceptions of Providers, the primary focus of high net worth investors is not expected to change significantly in 2014. 

In terms of investment vehicles, Ultra High Net Worth (UHNW) investors continue to favor equities, while Mass Affluents tend to prefer short-term accounts. Millionaires show a near split between the two investment alternatives.

The study indicates that as wealth increases, investors tend to become more interested in international investments, with 37 percent of UHNW investors indicating they will make international investments in the next 12 months, compared to 28 percent of Millionaires and just 17 percent of Mass Affluents.

The report also highlights the growing popularity of ETFs among investors of all levels of wealth. Among Mass Affluent Investors, mutual funds have dropped significantly in asset value since 2009 while ETF ownership has increased, with the average balance in these accounts doubling during the same period. Thirty-six percent of Millionaires indicate plans to invest in money market funds next year, down three percentage points. Additionally, one in five UHNW investors say they will consider investments in hedge funds or other alternative investment vehicles during the next 12 months.

"Ultra High Net Worth investors have regained the comfort they lost four years ago in the financial crisis, favoring equities after benefitting from their decision to do so last year," said Spectrem Group President George H. Walper, Jr. "Mass Affluents missed the equities wave and continue to be conservative in their investment strategy, while Millionaires are caught somewhere in the middle."

Spectrem's Wealth Segmentation Series looks at investors across three wealth segments: Mass Affluent (net worth of $100,000 to $1 million, Not Including Primary Residence), Millionaire ($1 million to $5 million, NIPR), and UHNW ($5 million to $25 million, NIPR).

Significant findings in the report include:

  • Short-term accounts and equities remain the top two investment vehicles across all wealth segments kind of basic.

  • Millionaires who are business owners or entrepreneurs are the most likely group to be aggressive in their investment philosophy.

  • Nearly a quarter of the UHNW made more than $10,000 in charitable contributions last year; nearly 80 percent of millionaires made less than $10,000 in charitable contributions last year.

  • Largest expenditures for UHNW were vacation, leisure travel, and home improvement, while automobiles and vacations or leisure travel were the two highest expenses for the Mass Affluent investor over the last 12 months. The Mass Affluent spent little to no money on gambling, and very little on club memberships.

  • Less than one-quarter of the Mass Affluent own long-term care insurance (LTC), while one-third of Millionaires own LTC insurance and almost 40 percent of the UHNW own LTC insurance.

Additional insights from Spectrem's latest report include:

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Spectrem Group ( strategically analyzes its ongoing primary research with investors to assist financial providers and advisors in understanding the Voice of the Investor.

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Charts, full methodology and summary insights available upon request; public use requires written permission from Spectrem Group.