U.S. High Net Worth Investors Emerge From Crisis Pessimistic and Less Trusting

NEW YORK, May 24 /PRNewswire/ -- Barclays Wealth, a leading global wealth manager, has published a new report, 'The Changing Wealth of Nations,' uncovering the perspectives of high net worth individuals around the world. The report, the eleventh in the Barclays Wealth Insights series, is based on a survey of more than 2,000 high net worth individuals globally and examines their views on wealth and the economy, their outlook for the future, and how the recession has shaped their behavior.  

U.S. High Net Worth Investors Emerge from Financial Crisis with a New Attitude to Investing

Recent economic events have shaped the way U.S. high net worth investors view their own investment portfolios, their economy, and their government.  More than one-third (37%) of U.S. high net worth investors have experienced a negative impact on their personal net worth as a result of the global economic downturn.  As a result, they are choosing to take a more active role in their money management.  Nearly half (44%) are reviewing their investment portfolio more than they were before the recession, and 22 percent say they now spend more than five hours each week actively investing their money.  Yet, this does not necessarily mean they have increased their reliance on their advisors or peers for advice.  Post recession, the majority have not changed how frequently they are speaking with their financial advisors, nor their friends and colleagues about investing (56% and 64%, respectively).  Instead, they are taking matters into their own hands.

Matthew E. Brady, Head of Wealth Advisory, Americas at Barclays Wealth, commented: "Global economic uncertainty has prompted a new 'wealth consciousness' in high net worth individuals in America and around the world.  As we start the new decade, wealthy investors are paying closer attention to how their wealth is being managed and taking a more hands-on role in the process of investment itself.  As 'engaged investors', they want to question the rationale and risks that lie behind their investment approach."

Lower risk and an increased focus on wealth preservation are top priorities for U.S. high net worth investors.  The majority (60%) divulge that the global downturn has made them more concerned about wealth preservation, and nearly half (47%) are avoiding high-risk investments more than they were before the downturn.  However, when considering where to invest, equities and real estate are the asset classes they expect to perform best, with the majority of U.S. respondents predicting equities and property will do well over the next five years.

Mr. Brady continued: "The sustained uncertainty around the prospects and timing of the global economic recovery is causing investors to favor the familiar and perceived less complex asset classes of equities and property.  However, the outlook among wealthy individuals is notably more cautious than their institutional peers."

High net worth investors in the U.S. are particularly pessimistic about the economic outlook, and are mistrusting of government.  Approximately half of the U.S. respondents believe that the U.S. (49%) and global (51%) economies will continue to deteriorate either over the next few years, or at least  over the next year before then improving.  While approximately one-third (34%) believe the U.S. economy is currently stable, that same group foresees only limited growth over the next few years.  Coinciding with these sentiments is their attitude toward the U.S. government.  The majority (60%) say that the downturn has caused them to trust less in the government, and two-thirds (66%) do not feel the U.S. government handled the economic downturn well.  

Post-Crisis, Definition of Wealth has Shifted

Emerging from the global financial crisis, there is recognition among wealthy U.S. investors that the definition of wealth is altered.  In fact, 68 percent of respondents agree that the global recession has changed the way the wealthy are seen by others.  When asked what wealth means to them, a substantial 91 percent said it allows them freedom of choice in their life, and 80 percent reported that wealth is a reward for hard work.  Only 38 percent view wealth as a means to get respect from friends and family.  

Mr. Brady at Barclays Wealth commented: "It's challenging to make sweeping assumptions about how to define wealth as, in so many cases, it is a personal decision for each of our clients.  However, the recent Barclays Wealth Insights research does bring to light the fact that wealthy Americans do not take anything for granted and, in many cases, believe that wealth actually comes with more responsibility to set an example, give to others, and contribute to their communities."

Interestingly, three-quarters of wealthy Americans surveyed are self-made, citing savings over time as the main source of their wealth.  This statistic is consistent with the finding that they continue to prioritize saving and not purchasing.  Three-quarters of wealthy Americans (75%) identified "saving for the future" as most important to them right now, while buying art/antiques, fashion/clothes, and interior design ranked lowest in importance to this group.

Nearly half (49%) believe the wealthy set an important example to others to be successful, while slightly fewer (44%) do not think the wealthy have an increasing responsibility to pay higher taxes.  The group is split on their views toward charitable responsibilities.  Thirty-eight percent spend more than two hours each week involved in charity work, but 25 percent spend no time at all.  Additionally, the disparity in commitment to charitable giving is illustrated by the finding that 32 percent plan to increase the amount of money they give to charitable causes, while the same number do not.

A Gender Divide in Investing Approach & Psychology of Wealth

As the number of wealthy women in America continues to increase, it is important to understand how their attitudes toward investing and decision making are different than those of their male counterparts.  According to the report, wealthy American women are less likely to consider themselves knowledgeable about – and are generally less interested in – finance and investing.  They spend less time actively managing their money, and are more likely than men to answer "don't know" when asked how they expect specific asset types to perform. Consequently, they are also more likely to rely on others for financial advice.  

Women in the U.S. view wealth as a means to happiness and status; they are more likely than men to cite wealth as "a sign of success" or something that "makes me happy".  In addition, when respondents were asked to reflect on their material desires, women were more likely to declare that they already have all the material things in the world they want.  

About Barclays Wealth

Barclays Wealth is a leading global wealth manager, and the UK's largest, with total client assets of $241bn (151.2bn pounds Sterling) as of 31 December 2009. With offices in over 20 countries, Barclays Wealth focuses on private and intermediary clients worldwide, providing international and private banking, investment management, fiduciary services and brokerage.

Barclays Group is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services with an extensive international presence in Europe, the Americas, Africa and Asia. With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 144,000 people.  Barclays moves, lends, invests and protects money for over 48 million customers and clients worldwide.

For further information about Barclays Wealth in the Americas, please visit our website www.barclayswealthamericas.com. Twitter page: www.twitter.com/barclayswealth  

Barclays Wealth is the wealth management division of Barclays Bank PLC, functioning through Barclays Capital Inc. in the United States. Barclays Capital Inc., an affiliate of Barclays Bank PLC, is a U.S. registered broker-dealer and regulated by the Securities & Exchange Commission. The registered office of Barclays Capital Inc. is 200 Park Avenue, New York, NY 10166. Member SIPC.

Methodology

This report, researched by Ledbury Research and written in conjunction with Barclays Wealth, is based on two main strands of research.  Ledbury conducted a survey of more than 2,000 high net worth individuals from 20 countries – including 500 from the U.S. – all of whom  have over $1.5 million/1 million pounds in investable assets and 200 of whom have more than $15 million/10 million pounds in investable assets.  The interviews took place in February and March 2010. Ledbury also conducted a series of interviews with business leaders, economists, entrepreneurs, philanthropists and other wealth experts from around the world.  

SOURCE Barclays Wealth