Despite rising concerns about meeting investment goals, most investors are staying put with their current portfolio allocations, according to a survey released by BlackRock.
In the face of economic uncertainty and market volatility around one in 10 investors is making portfolio adjustments, according to BlackRock's periodic "Barometer" survey of investors and financial advisors, released yesterday. In addition, investors say they're now facing the challenges of retirement planning. Forty-six percent of investors surveyed say they're now considering retiring later than they had initially planned, compared to 30 percent of investors a year ago.
In a separate survey, advisors point to concerns about longevity of savings, severe loss of portfolio, and market volatility as the top three factors affecting retirement timing. Sixty percent of advisors agreed that clients are lowering their expectations for the lifestyle they will have when retired, and 83 percent indicate that clients are generally planning on working longer and retiring later. "Living longer is a wonderful prospect, but for many investors the notion only heightens concern about whether their money will last," said Frank Porcelli, head of BlackRock's U.S. Retail Business. "But in fact, longevity gives investors greater ability to ride out market cycles, use a broader range of investments, and keep their money working hard for them over time."
In addition to achieving their retirement goals, only 50 percent of respondents felt prepared to manage education planning of a child or other dependent, considerably below their confidence level for other investment objectives.
While concerns about meeting these investment goals and optimism about the future direction of the market would suggest a more active posture in adjusting allocations, the survey indicates that many investors are unclear about what specific investment directions make most sense in an uncertain and volatile market environment.
Of those surveyed, 62 percent of investors said they were optimistic about the market's performance over the next six months. Yet when asked to describe today's financial environment, 57 percent of investors characterize conditions as "uncertain," while only 15 percent described financial markets as "full of opportunity."
As a result, investors are holding fast with their current portfolio allocations, with 46 percent planning to make no changes. The percentage of investors adjusting portfolios has dipped from 21 six months ago to 11 percent today. Investors also indicated that they are unwilling to take on risk, with just 11 percent doing so in the face of concern about market fundamentals and the potential impact on investment performance.
Ninety-one percent of investors said that market conditions are among the three biggest risks investors now face, up from 79 percent in 2011's third quarter. Similarly, 59 percent pointed to the "impact of unforeseen global or domestic economic events," and 69 percent to "market volatility. Investors are uncertain not just about the markets generally, but also about how specifically to deploy their money. Investors listed "uncertainty about where to invest" as their top reason for holding onto cash, followed by "a poor investing environment" and "the fear of losing money."
Research for BlackRock's survey was conducted over the Internet in the fall and the spring, with support from research firm Market Strategies International. The latest survey of 353 investors and 377 financial advisors was conducted from April 23 to May 7. All investors surveyed work with financial advisors, and 93 percent are age 56 or above. All those surveyed had $250,000 or more in investable assets.
BlackRock provides investment management, risk management and advisory services for institutional and retail clients. As of March 31, BlackRock had $3.684 trillion assets under management.
--Jim McConville