Tags: UBS | Wealthy | Frozen | Debt

UBS: Wealthy Are 'Frozen' as Debt Uncertainty Persists

Friday, 29 Jul 2011 02:46 PM

By Michelle Smith

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Investment advisers are finding themselves with growing numbers of high net-worth clients who are worried about their money. They are frozen, said Robert McCann, CEO of UBS' Wealth Management Americas business. And the chill is coming from the uncertainty generated by the debt debate.

The debt debate is causing Tim Ayles, chief investment officer at Napa Wealth Management, to get all kinds of fear-driven requests from his clients.

“One wanted to sell everything and hold cash. Another wanted to own almost all gold and gold stocks,” he wrote in an article on Seeking Alpha.

The United States is supposed to be working to strengthen its recovery. For most people, that would involve doing things like getting people back to work and encouraging those with money to spend it. But the debt debacle is pulling the nation in the wrong direction and causing people to want to clutch their wallets.

“What I see is people unwilling to make commitments to risk-based assets. That had started to alleviate but the current environment is creating that move to stay in cash and cash-like products,” McCann told CNBC.

Ayles considers the debt debate “nothing more than politics at its worst.” He says that the United States can't run out of money because “they dictate what money is, and then create it" if needed.

“When politicians are using the worthless debt ceilings to scare you into taking sides and changing up your long-term investing goals, you should do nothing,” he advises.

McMann told CNBC that it is the job of wealth advisers “to make sure that people don’t overreact to any single piece of news.”

Although the professionals may be mastering the technique of remaining cool-headed amid the turmoil, the debacle in Washington is having real effects on investors.

CNBC reported that a survey of UBS clients shows that pessimism is up to 60 percent from only 27 percent in April.

Call it pessimism or call it fear ... whatever the appropriate term for these effects, they are prompting a lot of people to ignore advisers who have the “do-nothing approach.”

Investors pulled $9 billion a day out of money funds this week, The Wall Street Journal reports.

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