Affluent Investors Unnerved By Debt Crisis, Survey Says
Lawmakers and Wall Street aren't the only ones worried about the U.S. debt crisis. With the clock ticking towards the August 2 deadline for raising the debt ceiling, affluent investors are seriously unnerved and pessimistic about not just the debt debate, but also the nation's economy in general, according to a recent survey.
Eighty-seven percent of U.S. citizens with $500,000 or more in investable assets say they have major concerns about the size of the federal deficit, according to a survey by research agency TNS of New York City. Of the 1,685 respondents, 56% say they are concerned that the U.S. may default on its debt obligations. While 70% feel a default would negatively impact their investments, 60% report that they do not think the U.S. government should increase the debt ceiling.
Anxious about the financial health of the U.S. government as well as their own, 40% of respondents say they would be willing to pay higher taxes if it prevented changes to Social Security and Medicare; 40% say they would be willing to accept changes to both Social Security and Medicare if it balanced the federal budget.
TNS also released its latest Investor Confidence Index, which reflects affluent households' investment expectations over a six-month horizon. Based on a survey conducted online June 22-29, the index decreased for the second consecutive time-the ongoing debt crisis a likely contributing factor-dropping in June to 102, its lowest level in a year. That represents a 17-point drop compared to January 2011-the largest drop recorded since 2008. The index stood at 124 in in 2003 and 136 in 2006, dropping to 101 in May of 2008, and then to 81 in October of that year.
There is across-the-board concern and uncertainty about the U.S. economy and how it will affect the financial well-being of Americans, TNS says. Forty-three percent of survey respondents feel the current state of the economy will jeopardize their retirement plans, and 40% plan to reduce spending compared to last year. While 70% of investors feel that their financial services firms are stable and secure, less than half believe that these institutions are looking out for their best interests.
The survey shows that for the remainder of the year, 39% of respondents think the overall economy will get worse; 20% believe their household income will be better, and 12% feel the opposite.
"These findings reveal significant stress and discomfort among investors who control the overwhelming majority of the personal wealth in the U.S," said Joe Hagan, senior vice president at TNS. "We expect investor confidence to decline further if a decision concerning the debt ceiling isn't made ahead of the August 2nd deadline. On the other hand, a satisfactory resolution could raise investor confidence and spur a rise in the financial markets."
Go to www.tns-us.com for further information.
In other news ...
Vision Report, Hedge Funds: Rebuilding on a New Foundation, recently released by State Street in Boston, examines the re-emergence of the hedge fund industry and what the company calls the "new dynamic" between investors, hedge funds and hedge fund administrators that has emerged to address sweeping regulatory changes and investor demands for enhanced fund transparency, liquidity and efficiency. Go to www.statestreet.com/vision for further information.
Islamic finance has experienced rapid growth in recent years, showing significant innovation and sophistication, and producing a broad range of investment products which are not limited to the complete replication of conventional fixed-income instruments, derivatives and fund structures, Dublin-based research firm Research and Markets says in its new book, Islamic Capital Markets: Products and Strategies. Go to www.researchandmarkets.com for further information.
The Dow Jones Credit Suisse Hedge Fund Index fell 1.36% in June, with eight out of ten sectors posting negative performance for the month, according to Oliver Schupp, president of Credit Suisse Index Co. LLC. Despite overall negative performance, the industry continued to see inflows, with an estimated $5.6 billion in assets entering the space in June, said Schupp. Go to www.hedgeindex.com for further information.
Fiscal year 2011 charitable assets, grants and funds contributed to existing accounts at Schwab Charitable reached the highest levels in its history, according to the donor-advised fund. As of June 30, the fund had assets of $3.1 billion, up 25% from the previous fiscal year; grants to charities totaled $519 million, up 23% from the previous year, compared to an increase of less than 4% in overall charitable giving nationally for calendar year 2011, said Schwab. Go to www.schwabcharitable.org for further information.
India, one of the world's fastest growing real estate markets and poised for another year of double-digit growth, is attracting foreign investors, especially NRIs (non-resident Indians), according to the report, Indian Housing Sector Analysis, from Research and Markets. High-net-worth NRIs are propelling demand for luxury housing in the country, a market that heretofore has been comparatively small but which possesses huge potential for further development, according to the report.
Citi has been named "Best Global Emerging Markets Bank" and "Best Global Transaction Banking House" by Euromoney. The bank's next level of growth will come by focusing on the emerging markets, "increasing wallet share with our clients and their global supply chain ecosystems, and tapping into new opportunities in cities with digital solutions and enterprise-wide services in collaboration with other parts of Citi," according to Francesco Vanni d'Archirafi, CEO of Global Transaction Services at Citi. Go to www.euromoney.com or www.citigroup.com for further information.
Van Hulzen Asset Management LLC (vaminvest.com) in Folsom, Calif., and Witter Partners LLC (www.witterpartners.com), a New York-based firm, have launch the Iron Horse Fund, a mutual fund investing in dividend?paying U.S. equities and using call options with the purpose of reducing portfolio volatility and creating incremental income. Van Hulzen is advisor to the fund and Witter Partners serves as Van Hulzen's strategic distribution and marketing partner. Go to www.ironhorsefund.com for further information.
Chicago-based Northern Trust has released a revised second edition of Legacy: Conversations About Wealth Transfer, which is designed to help affluent individuals and families create an estate centered around their life goals and values. The revised edition reflects changes in current law and provides counsel on topics that include developing a family charitable mission statement; wealth transfer issues, including planning for disabilities such as cognitive decline; and wealth transfer strategies for the LGBT community and non-traditional families. To download the e-book, go to www.northerntrust.com/legacyebook.
Events
CPA Australia's Asset Accounting and Management 2011 Conference will be held July 25-26 at the Park Hyatt Melbourne in Melbourne. Go to www.cpaaustralia.com.au for further information.
The CFA Institute Australia Investment Conference will be held August 11 at the Sofitel Sydney Wentworth in Sydney. Topics include the effects of the rise of China and the emerging markets to investment professionals. Go to bit.ly/cfa_austconf_2011 for further information.
The Global Business, Finance and Economics Research Conference will be held August 11-14 at the Istanbul Hilton in Istanbul. The conference brings together business-related academicians and professionals and provides an opportunity for researchers to publish research papers and review peer work. Go to www.jaabc.com for further information.
The IPARM (Investment Performance Analysis and Risk Management) Southeast Asia Conference will be held August 16-17 at the Grand Copthorne Waterfront Hotel Singapore in Singapore. The conference will examine alternative assets portfolio analytics and liquidity risk management, as well as fixed income risk and performance management. Go to www.iparmasia.com for further information.
The Hedge Funds Investments Asia Summit will be held August 23 in Hong Kong. Go to www.hedgefundinvestmentsasia.com for further information.
On The Move
NWK Group Inc., an independent wealth management and pension consulting firm in San Francisco serving high-net-worth individuals and families and retirement plan sponsors, has hired Christine Lim, former vice president of client services for Charles Schwab, as a wealth manager.
Foundation Source in Fairfield, Conn., has named H. King McGlaughon chief executive officer, effective August 1. Previously, McGlaughon was chief philanthropic officer for Wells Fargo Philanthropic Services.
CAISfunds, a New York-based financial technology company, has hired Minka Nyberg as European advisor to the firm. Based in Zurich, Nyberg, former executive director and head of alternative investments at Bank Julius Baer & Co., will advise CAISfunds on overall European business strategy including wealth management and private banking trends, regulatory changes, and client expansion.
Hutchens Investment Management Inc. in Concord, N.H., has merged with New Leaf Asset Management LLC in New London, N.H. New Leaf executives Fletcher Cole (a New Leaf co-founder) and Carrie Bossi have joined Hutchens as partner and researcher, respectively.
U.S. Bank's Ascent Private Capital Management has hired Amy Zehnder, an organizational psychologist with extensive wealth management experience, to address the "qualitative" issues surrounding wealth management. Zehnder will help client families develop a shared understanding of their values and strengths, deemed essential to taking steps to retain control of family wealth across successive generations.
Chase has opened its new Chase Private Client office, which serves affluent families and individuals through Private Client Banker and J.P. Morgan Private Client Advisor services, at its 61st Street & Broadway location in New York City. By the end of 2011, Chase Private Client plans to serve more than 250 locations, and by 2013 approximately 600 branches, according to the company.
The New York-based law firm WeiserMazars LLP, whose clients include high-net-worth individuals and owner-managed businesses, has hired David Hurst as a principal in its Financial Services Consulting Group. At the same time, the firm purchased Cogniscape LLC, a company founded by Hurst in 2004. Prior to this, Hurst was a senior manager at Smart and Associates and Arthur Andersen.
-Cort Smith