-- Investment Attitudes More Conservative, Reflecting Short-Term Market Environment --
PARSIPPANY, NJ – August 4, 2005 – Across all age groups, investors acknowledge they need help managing their investments, according to the Fifth Annual Across Generations survey released today by the MainStay Investments division of New York Life Investment Management LLC (NYLIM). Half of GenX investors, 46% of Boomers and 45% of Matures believe they “need the help of professionals,” up roughly 10% across the board from 2004. Investors also acknowledge the need for more comprehensive financial planning. Among investors who do not currently have a financial plan, 56% of GenXers and 39% of Boomers expect to need one in the future, up from 50% and 35% respectively in 2004.
Investors More Risk Averse
Reversing the trends of 2004, investors across all age groups are seeking out more conservative investment options. An exuberant market in the twelve months preceding the survey in 2004 (S&P 500 return March ’03 through February ’04: 38.54%) may have led investors to feel comfortable with a more aggressive approach. This was followed by a much weaker twelve month period ending in February ’05 (6.96%). Following this, 26% of GenXers report their investment styles as conservative in 2005, up from 19% in 2004. Similarly, 40% of Boomers and 49% of Matures now identify themselves as conservative investors, up from 28% and 39%, respectively, in 2004.
“Investors who change their investment approach - and shift assets as a result - based on the recent history in the capital markets are far more likely to do damage to their long-term financial well-being than those who follow a comprehensive financial plan,” says Beverly Moore, Managing Director of Wealth Strategies at MainStay Investments. “We’re seeing a real disconnect between investors’ attitudes and their lifetime goals. They’re driving by the rear-view mirror.”
Additional findings of the survey reveal:
Investors Yell “Help!”
Five years after the peak of the dot-com investing era, more investors admit they need help to save and to plan for those savings. While “not having enough discretionary income” is the most frequently cited reason for not saving or investing more – mentioned by approximately half of all survey respondents –a significant percentage of investors procrastinate and/or lack confidence.
- More than one in ten of the GenXers (11%) and Boomers (10%) surveyed say they simply “haven’t gotten around to” saving/investing more.
- More than one in seven (14%) of GenXers and Boomers – and 8% of Matures– admit they “don’t have enough time/financial knowledge to make prudent investment decisions.”
Today, approximately half of GenXers work with an investment professional of some kind. In addition, roughly one in five (21%) expects to begin working with a financial advisor over the next three to five years, as do 14% of Boomers.
A Sign of Cooling? Real Estate Loses Sizzle
Over the past 12 months, there has been a sharp drop in the percentage of investors across all age groups who plan to purchase real estate over the next three to five years:
- In 2005, 13% of GenXers plan to add real estate, compared with 32% in 2004
- In 2005, only 5% of Boomers plan to add real estate, compared with 18% in 2004
- 6% of Matures in 2005 plan to add real estate, down from 16% in 2004
“Though most media signs point to a never-ending real estate boom, actual investor intentions from the Generations survey indicate fewer assets allocated to future real estate purchases,” Moore continued. “Whether or not this means the real estate market is cooling off, there are some very real opportunities out there for advisors to help investors select other investment options for those assets, because if they aren’t sinking large sums into real estate, they have to put it elsewhere,” she continued.
Moving Cash to the Sidelines
But they’re not necessarily putting that money back into the stock market. The 2005 Generations survey found that GenX and Baby Boomer investors – a combined population nearly 133 million strong – are holding cash out of the market.
- 37% of GenXers, 32% of Boomers and 23% of Matures have moved cash to the sidelines over the past 6 months
- Less than 5% of all investors have reduced their cash holdings.
“With Boomers approaching retirement and the oldest GenXers turning 40, today’s investors need to be putting money into investments with growth potential for college savings and retirement,” commented Moore. “The fact that many of them are stashing their cash represents a challenge for financial advisors to get them to take action. While nearly half of all investors recognize that they need help from investment professionals, a significant number of GenX and Boomer investors have not yet sought out that advice,” said Moore.
Fund-of-Funds Peaks Strong Interest
As investors move away from investing in real estate and non-retirement assets (non-retirement assets for Boomers declined to 57% in 2005 from 79% in 2004) indications point to the strong interest in fund-of-funds, which pool mutual funds together to achieve and enhance asset allocation:
- Three-quarters of GenXers and Boomers – and 57% of Matures – are interested in investing in mutual fund-of-funds
“This next generation of pooled investment products – or fund-of-funds – are low-maintenance and well diversified," notes Moore. "We're seeing a strong demand among investors for professional management and advisory services. Whether we're talking about long-term planning or asset allocation, the percentage of investors seeking do-it-yourself solutions is definitely on the decline."
For a copy of the MainStay Investments Across Generations 2005 Survey Results white paper, which provides the highlights of investment attitudes and behaviors of GenXers, Baby Boomers, and Matures, please contact Meghan Lantier at Bliss, Gouverneur Associates (212.840.1661).
The MainStay Across Generations Survey (2005) was conducted by an online research firm during the spring of 2005. The survey polled 1,537 individuals ages 26 to 82 on their investment attitudes, behaviors, objectives and priorities. Respondents were U.S. residents with a total net worth of at least $100,000. GenX is defined as age 26 to 40, Boomers are defined as age 41 to 59 and Matures as age 60 to 82.
New York Life Investment Management LLC and its affiliates, with more than $192 billion in assets under management as of June 30, 2005, provide a wide range of investment services to institutional, individual, corporate, public, and Taft-Hartley clients, including institutional asset management, retail investments, retirement services, guaranteed products, real estate investments, and alternative investments. For more information, visit the New York Life Investment Management website at www.nylim.com .
FOR MORE INFORMATION:
Bliss, Gouverneur & Associates
Meghan Lantier
(212) 840-1661
New York Life Investment Management LLC
Neal McDonough
(973) 394-4408
###
_20.gif){kind=small}
