How do potential clients feel about their investments in 2015?
According to recent studies, the country's wealthier investors are more optimistic than ever before.
Despite recent high-profile data breaches, turmoil in the Eurozone and tensions in the Middle East and Ukraine, investor confidence is up, with 76% of respondents saying they are optimistic in a recent Morgan Stanley Wealth Management study. This is up from 66% in 2013. The poll surveyed about 1,000 investors with at least $100,000 in investable assets. One third of those had assets exceeding $1 million.
A study by Cogent Wealth Reports released late last year found that more than 80% of potential clients with less than $1 million in investable assets were also upbeat about the current investing environment. A study by Phoenix Marketing International found similar results: 65% of investors with more than $100,000 and 71% with more than $1 million in investable assets were optimistic about the country's economic outlook over the next three months.
See the trends below or view the the slideshow here to see these and other client trends, and to get a better grasp on what's on your clients' minds as they think about their investments for this year.
WHO'S GETTING ADVICE?
Of investors with more than $5 million in assets, nearly 90% said they use a dedicated financial advisor, according to the Cogent study. That number dropped significantly for clients with fewer assets: Just 66% of clients with investable assets under $1 million used an advisor, the report found. Moreover, 71% of people with more than $100,000 in assets used an advisor, according to a Morgan Stanley poll administered in the fourth quarter of 2014.
What worries clients? According to Morgan's data, 86% of all investors and 88% of millionaire investors are concerned about the affect foreign conflicts could have on markets.
Among other worries, 81% of clients are concerned about the potential effects of terrorist attack on the U.S. and 80% cited the government's budget deficit as another potential issue, the study found.
ULTRAWEALTHY WANT AN ACTIVE ROLE IN THEIR PORTFOLIOS
More than nine in 10 investors with over $5 million in assets own individual stocks while six in 10 hold individual bonds, according to the Cogent study. An estimated 43% of investors in the $5 million-plus segment also reported owning ETFs, twice as many as found in the other fiscal tiers studied.
"Not only does ownership of individual securities -- stocks, bonds and ETFs -- increase with affluence, these investors really want to play an active role in their investments," said Sonia Sharigian, senior product manager with Cogent. "For product providers, this underscores the need to appeal directly to these wealthy investors and work alongside advisors on which product offerings and strategies will resonate most for these clients."
Nearly 60% of clients viewed dividend-bearing stocks as a good investment for 2015, the Morgan Stanley's survey found. Just about half of clients also favored S&P 500 Index funds and mutual or exchange-traded funds.
Almost nine in 10 wealthy investors in the Morgan Stanley study said they are more apt to invest in technology than any other sector in 2015. Biotech (81%), pharmaceuticals (71%) and energy (69%) were the next most favored sectors for the year ahead. A further breakdown of the energy sector is on the following slide.
INVESTING IN ENERGY
In a further breakdown of the energy sector, clients saw a mix of traditional and alternative energy sources as a top investment prospect for 2015, including natural gas (76%), solar (61%), petroleum (53%) and wind (52%), according to Morgan Stanley's research.
Only 21% in the study said coal would be a good investment this year.
Slightly more than half of investors say personal issues affect their investment decisions, according to Morgan Stanley. Of those investors, 77% cited clean energy and 58% cited climate change as leading concerns when they think about investing.
According to Phoenix Marketing International study, 33% of clients with more than $100,000 investable assets and 45% of those with more than $1 million said they were likely to make net increases to their portfolio over the next three months.
More clients anticipate the U.S. economy will strengthen more so than foreign economies, according to the Morgan Stanley poll. Of those surveyed, 34% expected the domestic economy to improve compared to 27% who think the global economy would improve.
"They are most bullish on the U.S. economy, which certainly has improved since the time this polling was done," said Jim Wiggins, the head of corporate communications for Morgan Stanley Wealth Management. "The U.S. economy continues to be the bright spot in the globe, and that's not a loss on investors."
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