Fear of Market Uncertainty Continues to Drive Preference for Retirement Guarantees

Second Annual Allianz Life Market Perceptions Study Confirms Desire
for Protection

MINNEAPOLIS–(BUSINESS WIRE)–Despite relatively stable market performance in 2015, Americans remain
nervous about financial market stability and it’s the main concern
keeping them from investing, according to the 2015 Market Perceptions
Study from Allianz Life Insurance Company of North America (Allianz Life®).*
The second annual study also found that, compared with responses from
the 2014 study, an increasing proportion of Americans surveyed would
rather buy a financial product that includes guaranteed returns with no
chance of loss rather than one with higher growth potential but the
possibility of losing value.

More than a third of respondents (37%) said “fear of market uncertainty”
would prevent them from investing today if they had extra cash
available. That’s slightly lower than the 40% who expressed that concern
in 2014, but it remains the top reason keeping them out of the market,
followed by “lack of reliable financial guidance” (23%) and “today’s low
interest rates” (21%). This attitude seems to be driving interest in
products with guarantees, as 81% – up from 78% in 2014 – said they find
a product with 4% return that is guaranteed not to lose value more
attractive than one with 8% return that is vulnerable to market
downturns.

In fact, a majority of Americans have a somewhat negative impression of
today’s stock market, with 34% saying they are “worried” and believe the
market is “too volatile and too risky” for their investment style and
18% saying they feel “the stock market is a necessary place to invest
money for the long term, even though it can be nerve-wracking at times.”
A quarter of respondents said they believe that “with a balanced
approach, the stock market is a smart place to invest a portion of one’s
assets” and 23% said they are “comfortable with the stock market”
because they are in “for the long term.”

Fear of market uncertainty also continues to drive popular opinion on
retirement strategies, with 62% of respondents agreeing that, when
making retirement plans, they assume the market will continue to be
uncertain, similar to the 64% who agreed with that statement in 2014.
Accordingly, 79% of respondents agreed that it’s important to have a
guaranteed source of income in retirement, nearly equal to the 80% who
agreed in 2014. Only 26% said they are comfortable with current market
conditions and ready to invest now, down slightly from 28% in 2014.

“Whether it’s a hangover from the market crash of 2008 or the various
bumps in the road we’ve experienced along the way, the majority of
Americans are simply not comfortable with any type of market volatility
and are looking for ways to mitigate exposure while still building up
their retirement nest eggs,” said Katie Libbe, vice president of
Consumer Insights for Allianz Life. “Persistent desire for guarantees in
this market environment tells a compelling story that, regardless of how
the market actually performs, Americans want some type of protection
against losses in their retirement savings strategy.”

Summer Market Swoon Brings Mixed Reaction

Interestingly, the market swoon that took place in late August through
September 2015 was not as significant a factor in driving more
conservative investment behavior as one might assume. When asked how
they felt after the low point of the market decline on August 25, nearly
two in five (38%) said they didn’t remember and a full quarter said they
weren’t worried and left their investments alone. Yet many did have an
adverse reaction, with 17% saying they were anxious about the downturn,
13% saying they were worried they would lose a lot of their retirement
savings, 10% noting they felt too nervous to put more money in the
market, and 9% believing they needed to move their money to less risky
investments.

In terms of how they will invest in the future, the majority said they
were unaffected – either investing the same way but paying more
attention to their investments (24%) or making no changes because they
are in the market for the long haul (38%).

Extra Cash – What Would You Do?

When asked what they would be most likely to do if they had extra cash
today to purchase a financial product for their retirement, responses
were very similar to those provided in 2014:

  • 36% said they would put extra cash into a product that offers a
    balance of potential growth and some level of protection (up to 10%
    growth, a level of protection if the market goes down more than 10%) –
    down from 39% in 2014.
  • 22% said they would put extra cash into a product with modest growth
    potential (2%-3%) and no potential loss – up from 19% in 2014.
  • 21% said they would put extra cash into a savings account earning
    little or no interest – up from 19% in 2014.
  • 13% said they would hold their extra cash and wait for the market to
    correct before purchasing a financial product for their retirement –
    up from 12% in 2014.
  • 9% said they would put extra cash into a product with high growth
    potential and no protection from loss – down from 11% in 2014.

What Lies Ahead for the Market in 2016?

According to the study, the majority of Americans have a healthy outlook
for the market in 2016. Most respondents predict there will be some
growth, but it will be accompanied by a level of volatility. More than
two-thirds of respondents (67%) predict “modest volatility” over “not
much volatility” (18%) or “significant volatility” (15%). More than half
(51%) expect market growth of 5% or more, with nearly a third (30%)
predicting flat or minor growth for the year.

About Allianz Life

Allianz
Life Insurance Company of North America
, one of FORTUNE’s 100 Best
Companies to Work For in 2015, has been keeping its promises since 1896.
Today, it carries on that tradition, helping Americans achieve their
retirement income and protection goals with a variety of annuities and
life insurance products. As a leading provider of fixed index annuities,
Allianz Life is part of Allianz SE, a global leader in the financial
services industry with 147,000 employees worldwide. More than 85 million
private and corporate customers rely on Allianz knowledge, global reach,
and capital strength to help them make the most of financial
opportunities.

*The Allianz Life 2015 Market Perceptions Study was conducted by
Ipsos via their online iSay/Ampario Panel from October 21 – 22, 2015
with 797 panel respondents ages 18-55+ who identified as NOT retired,
and was commissioned by Allianz Life Insurance Company of North America.

Contacts

Allianz Life Insurance Company of North America
Sara Thurin
Rollin, 763-765-6703
sarathurin.rollin@allianzlife.com