American investors are conflicted about where to put their money. That confusion, however, could be good news for financial advisers.
According to a study conducted by Spectrem Group, investors are increasingly interested in alternatives such as real estate and gold. But most Americans report that the asset they are most likely to invest in this year is cash.
The 1,200 investors surveyed were broken down into three groups: those with $100,000 to $1 million in investible assets, those with $1 million and $5 million in assets and those with $5 million to $25 million.
However, the percentage of those who plan to buy bank certificates of deposit, money market funds and Treasury bills this year remained relatively flat at about half for all three groups.
“For the most part, investors are waiting to see what the markets are going to do,” said Cathy McBreen, a Spectrem Group managing director. “They are waiting to find out what will happen in Europe, and waiting for the U.S. elections and debt issues to be decided.”
The overall percentage of investors likely to invest in real estate more than doubled last year, up to 13% from 6% in 2010, the Spectrem Group study showed. The share of investors likely to invest in precious metals such as gold rose last year to 14%, from 9%. For the ultrahigh-net-worth investor with $5 million to $25 million to invest, the percentage that invested in precious metals rose to 21%, from 11% in 2010.
“Investors are looking for alternatives but not a
hedge fund,” Ms. McBreen said. “They want things they feel comfortable with, such as gold and real estate.”
Advisers should be able to explain the pros and cons of these investments for different types of clients. They would do well to recommend investments that aren't correlated to the markets, Ms. McBreen said.
Investors no longer think that their best shot for reliable returns is to leave assets in the markets for the long term, she noted.
“The overall trend is toward people investing less conservatively, which will be great for advisers who can coach these people,” Ms. McBreen said. “But these investors aren't going to buy into the same old stories of where to put their money.”
