BOOMERS AND ADVISORS REMAIN UNEASY
ABOUT VOLATILITY EVEN WHEN MARKET CLIMBS, METLIFE POLL FINDS
Boomers Lack Confidence in Traditional Investments, Seeking Greater Portfolio Stability
NEW YORK, NY - April 11, 2011 – Two years after the depths of the financial crisis were reached, both Baby Boomers and financial advisors remain concerned about market volatility --defined as sharp swings in value up or down over brief periods -- in retirement accounts, a new MetLife poll shows. Even as the stock market rebounded earlier this year, this concern was expressed by three fourths of Boomers and almost nine out of ten financial advisors. Most Boomers lacked confidence in their investments, and many were interested in portfolio management approaches that could provide more consistent returns, the survey found.
MetLife’s Market Volatility Poll, fielded in February of this year, included 520 financial advisors and 1,038 adults over the age of 45 with at least $100,000 in investable assets. More than one-half (54%) of Boomers and 58% of advisors cited 10% or less as their comfort zone for volatility, and one-fourth of Boomers were only at ease with 5% or less. Underscoring uneasiness about retirement security, only 32% of Boomers expressed confidence in their investments, a finding highlighted by the fact that almost one-half (45%) said that they check their account balances at least once a week.
The link between volatility and client wariness is a strong one in the eyes of advisors -- 88% said that seeing volatility in their retirement accounts raised clients’ concerns about retirement and financial security, while 56% of Boomers say the same. Still, Boomers are taking a more balanced stance now as they invest for retirement than was the case in the aftermath of the financial crisis two years ago. At that time, three fourths of this group expressed a preference for protecting against losses versus participating in market gains, according to a MetLife survey in 2009. Now, there is roughly a 50-50 split in preferences between protecting and participating in gains.
“With the market recovery, Boomers are starting to become more confident about investing in equities, but volatility continues to be top of mind and a significant concern. Our survey shows there is rising interest in exploring newer investment approaches that offer the potential to provide steadier, more consistent returns over the long term,” said Robert E. Sollmann, Jr., executive vice president, Retirement Products at MetLife. “In the past, these forward-looking approaches were mainly available only to large institutional investors such as endowments, but leading professional money managers are now offering more alternative products to all investors,” he added.
Strong Interest Among Advisors
The MetLife poll disclosed a strong desire among financial advisors to seek other options beyond traditional asset allocation models in confronting market risk and volatility. Half of advisors (51%) agreed that alternative investments are needed to better manage volatility -- the same percentage disagreed that “a mix of stocks, bonds and cash” is enough to manage volatility in their clients’ retirement portfolios. Moreover, 57% of advisors were interested in a “product that could provide more consistent returns.”
Not surprisingly, Boomers lagged behind advisors in awareness of alternatives, with almost two-thirds (64%) saying they were unsure about whether “retirement portfolios need to be managed differently in today’s economy.” However, there was corresponding uncertainty about traditional investment strategies as well -- 58% were unsure whether “retirement portfolios should be set and left for the long term. “ At the same time many Boomers (42%) unfamiliar with alternative investments wanted to learn more.
Younger boomers and sophisticated investors were most open to getting information about alternative investments: – 61% of those ages 45-54 and 45% of those ages 55-64 who were unfamiliar with alternatives wanted to learn more, compared with just 23% of those over the age of 65. Those Boomers who described themselves as sophisticated investors expressed considerable interest in alternative products – 58% would like to be educated, the MetLife survey found.
“When we consider that most Boomers lack confidence in their investments, pronounced aversion to market volatility is understandable,” noted Julia Lennox, vice president, Retirement Products. “Many of those Boomers surveyed clearly were open to learning more about new approaches to manage volatility, as well as to grow assets, and many advisors appear ready to help clients with solutions that can make the road to retirement a smoother one.”
The MetLife Poll was conducted online for MetLife by Harris Interactive between February 3 and 11, 2011 among a nationally representative sample of 1,038 U.S. residents, 45 years of age or older and with investable assets of at least $100,000 (excluding residence), including 500 having investable assets of at least $200,000. Results for age, sex, race/ethnicity, education, region, employment, and household income were weighted where necessary to bring them into line with their actual proportions in the population of adults age 45 years of age or older in the U.S. with investable assets of at least $100,000 (excluding residence). Propensity score weighting was also used to adjust for respondents’ propensity to be online. A full methodology is available.
MetLife is a subsidiary of MetLife, Inc. (NYSE: MET), a leading global provider of insurance, annuities and employee benefit programs, serving 90 million customers in over 60 countries. Through its subsidiaries and affiliates, MetLife holds leading market positions in the United States, Japan, Latin America, Asia Pacific, Europe and the Middle East. For more information, visit www.metlife.com.
About Harris Interactive
Harris Interactive is one of the world's leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us - and our clients - stay ahead of what's next. For more information, visit www.harrisinteractive.com.