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May 28, 2010 at 08:00 PM
U.S. high-net-worth investors have emerged from the recent financial crisis pessimistic about the American and global economies and with less trust in Washington’s ability to manage financial crises, according a new Barclays Wealth Americas report, “The Changing Wealth of Nations.” The report is based on a survey of more than 2,000 high-net-worth (HNW) individuals around the world, the firm said in a May 24 announcement.
The announcement highlighted several key findings specific to U.S. HNW investors. For one, recent economic events have shaped the way wealthy American investors view their own investment portfolios. More than one-third have experienced a negative effect on their personal net worth as a result of the global downturn, and are taking a more active role in their money management. Nearly half are reviewing their investment portfolio more than they were before the recession. Still, the majority have not changed how frequently they speak with their financial advisors, friends, and colleagues about investing.
Lower risk and an increased focus on wealth preservation are top priorities for wealthy U.S. investors. Sixty percent said the global downturn has made them more concerned about wealth preservation, and 47% were avoiding high-risk investments more than they were before the downturn. The majority expected equities and real estate to do well over the next five years.
The U.S. respondents were especially pessimistic about the economic outlook. Just about half believed that both the U.S. and the global economies will continue to deteriorate either during the next few years or at least over the next year before then improving. Although approximately one-third considered the U.S. economy currently stable, the same group foresaw only limited growth over the next few years. These sentiments coincided with their attitude toward the U.S. government. Sixty percent said the downturn has caused them to trust less in the government, and 66% said they do not feel Washington handled the economic downturn well.
A New Definition of Wealth
Emerging from the global financial crisis, wealthy U.S. investors recognize that the definition of wealth is altered. A substantial 91% said their wealth allows them freedom of choice in their life, and 80% considered it a reward for hard work. Only 38% viewed wealth as a means to get respect from friends and family.
