Wealthy Turn Sour on Economy, Advisers Hopeful

Thursday, 16 Jun 2011 12:00 AM

 

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Millionaires are less optimistic about the U.S. economy's prospects than their wealth advisers and are taking a cautious approach in their investments, according to a new data analysis released Thursday from Fidelity Investments.

The Boston-based investment firm's third monthly Insights on Advice report found brokers and advisers are more confident about all key sectors of the economy than their millionaire clients, including real estate, consumer and business spending, and the stock market.

The analysis highlights the schism between wealthy investors still wounded by the 2008 financial crisis and subsequent recession — and fears of a double dip recession — and advisers whose businesses weathered the worst of the downturn.

As a result, millionaires are also more cautious in their investments, even as they are planning on increasing their portfolio allocations over the next year.

Millionaire investors now prefer fixed income investments, while advisers are recommending in annuities, international and emerging markets and domestic equities.

In the largest gap between advisers and millionaires, 60 percent of advisers planned to recommend annuities to their clients, versus just 13 percent of millionaires planning to invest in them over the next year.

Both groups plan to allocate more money to mutual funds, however, with 53 percent of advisers recommending the investment, and roughly 50 percent of millionaires interested in it.

Fidelity's analysis comes one day after a Charles Schwab Corp study found investors are less confident about their retirement planning.

Roughly 39 percent of those surveyed have concerns about retirement, and less than half of the Baby Boomer generation expresses confidence in their retirement readiness.

Fidelity's latest analysis is the combination of two surveys conducted in late 2010:.

The Fidelity Millionaire Outlook surveyed 1,011 households with at least $1 million in investable assets in October 2010.

The Fidelity Investments Broker and Adviser Sentiment Index also surveyed 1,046 U.S. investment professionals in late 2010.

© 2014 Thomson/Reuters. All rights reserved.

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