Wealthy less bullish than their advisers

CHARLOTTE, N.C./NEW YORK Thu Jun 16, 2011 3:10pm EDT

A model reads a magazine during the Millionaire Fair of luxury goods in Moscow, July 4, 2010. REUTERS/Sergei Karpukhin

A model reads a magazine during the Millionaire Fair of luxury goods in Moscow, July 4, 2010.

Credit: Reuters/Sergei Karpukhin

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CHARLOTTE, N.C./NEW YORK (Reuters) - Millionaires are less optimistic about the U.S. economy than their financial advisers and are taking a more cautious approach in their investments, Fidelity Investments said on Thursday.

The Boston-based mutual fund and brokerage giant's latest Insights on Advice report found that brokers and advisers are more confident than their millionaire clients about all key sectors of the economy, including real estate, consumer and business spending, and the stock market.

The analysis highlights the confidence gap between investors scarred by the financial crisis and recession, and advisers whose businesses weathered the slump.

"Examining the disparities between the groups presents some clear opportunities for brokers and advisers to fine-tune their approaches," Fidelity Institutional Wealth Services President Mike Durbin said in a statement.

Millionaires prefer bonds, for example, even as advisers recommend putting more money into international and emerging markets and U.S. stocks.

The biggest discrepancy can be found around annuities: 60 percent of advisers plan to recommend them, but only 13 percent of millionaires plan to buy them. About half of both groups plan to allocate more money to mutual funds.


Fidelity's analysis comes one day after a Charles Schwab Corp study found the average investor lacks confidence about achieving retirement goals.

Roughly 39 percent of investors surveyed by Schwab have concerns about retirement, though there is a wide gap between older and younger Americans.

A little more than half of people 65 and older expressed confidence in their retirement readiness, compared with 26 percent of those between the ages of 18 and 34.

Confidence increased for those of any age who worked out detailed financial plans.

"Across all age groups, only 39 percent of people have actually crunched the numbers on retirement savings," said Carrie Schwab-Pomerantz, a senior vice president and daughter of company founder Chuck Schwab. "There is some ground to make up in terms of people sitting down with a plan."

In another survey, the Certified Financial Planner Board of Standards found that 60 percent of Americans do not expect the economy to rebound during the next year.

On the other hand, 38 percent of respondents believe their own personal financial situation will improve, compared with 17 percent worried it will get worse.

Personal outlook brightens for those who have plotted out their savings, spending and investment goals, the CFP Board said.

"Those with a financial plan feel more optimistic about their own future and are more willing to contribute to the economy by spending more," Charles Moran, this year's CFP Board chairman, told reporters in a briefing on Thursday.

Moran said most people who say they have a plan may be exaggerating. Half have plans "in their head," while 11 percent just have notes jotted on envelopes and cocktail napkins, he said.

(Reporting by Joe Rauch in Charlotte, N.C., and Joseph Giannone in New York; editing by Dave Zimmerman and John Wallace)

(Corrects name of CFP Board chairman to Moran in last 2 paragraphs)

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Comments (3)
Ralphooo wrote:
Don’t worry, trillionaires! Republicans plan to tax the poor, cut social programs and infrastructure services, cancel all regulation of anything, and give the money saved directly to you — if you agree to give a little bit of it back to them as “campaign contributions.” (Politicians in the are pathetic. For fifty thousand dollars they will do anything you wish.)

Jun 16, 2011 10:54am EDT  --  Report as abuse
economixer wrote:
The real headline should read “Why are 60% of advisers recommending annuities to their millionaire clients?” In other news, annuities have about the highest and most costly commission payout of all the financial products on the market.

Jun 17, 2011 8:58am EDT  --  Report as abuse
what’s the matter little fella, we’re not paying enough of your way?
Isn’t it kind of embarrassing as a man to know other smarter, more able men are paying your way in this world?
I’m betting from your posts the answer is no.
now grab your paper hat, you’re late for work.

Jun 17, 2011 2:34pm EDT  --  Report as abuse
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