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MORGAN STANLEY WEALTH MANAGEMENT POLL REVEALS BOSTON AREA INVESTORS AMONG MOST BULLISH IN US ABOUT THE MARKETS AND NATIONAL, STATE AND LOCAL ECONOMIES

LOCAL INVESTORS CONFIDENT IN U.S. ECONOMY BUT INCREASINGLY CONCERNED ABOUT FOREIGN CONFLICTS

BIO-TECH, TECH AND PHARMA SECTORS SEEN AS GOOD INVESTMENTS 

RISING OCEAN LEVELS AND INCREASED EROSION LEAVE INVESTORS SKITTISH ABOUT BUYING OCEAN FRONT PROPERTY

BOSTON, JANUARY 29, 2014 – As the stock market continues to rise Boston-area high net worth (HNW) investors with at least $100,000 in investable assets are optimistic about the prospects for their portfolios – and growth of the U.S., Massachusetts and Boston economies, according to a new Morgan Stanley Wealth Management Investor Pulse Poll. Tracking closely to national poll results, they are confident about reaching their long-term financial goals.

  • Boston investors are much more bullish about the U.S. economy, with 76% saying it will be “the same” or “better” by year-end compared to 62% of investors nationally.
  • Boston investors are also increasingly bullish about the Massachusetts economy, with 82% saying the economy will be “the same” or “better” by year-end, up 3% from a similar survey conducted during the first quarter of 2013.
  • Investors also believe in the Greater Boston economy, with 87% saying the local economy will be “the same” or “better” by year-end.
  • 87% of respondents also expect their own household’s investment portfolios to be the same or better by year-end, and a similarly high proportion of investors (83%) are confident of achieving their long-term financial goals.
  • Retirees in Boston are significantly more confident in their portfolios than counterparts in other states: 55% among the post-employment set say their portfolio is performing better than expected, compared to just 34% nationally. 

“It’s encouraging to see such strong local optimism about the markets,” said Rick Ryan, Morgan Stanley Regional Director for Greater New England. “Investors in Boston are savvy and educated, and their confidence in the market reflects better economic conditions than we’ve seen over the past several years.”  

Leading concerns range from economic to geopolitical

When asked about their concerns, U.S. economic prospects (84%) and increased foreign conflicts (83%) top the list.

  • Notably, concern about the government budget deficit dropped to 76% in this survey, down from 91% in a similar poll conducted in the first quarter of 2013.
  • Also of high concern to these investors is social security for their generation (73%), affording quality health care (72%; down from 79% in Q1 2013) and the national trade deficit (71%). 

In favor assets: dividend-bearing stocks, broad index funds, REITs;

Out of favor assets: corporate bonds, state municipal bonds, treasuries.

Equities make up the biggest single portion of Boston area investors’ portfolios (42%), followed by fixed income (21%), cash (21%), and all other investments (16%).

  • Boston investors believe good investments for 2014 are dividend bearing stocks (48%  “good”), S&P 500 index funds (47%), and Dow Jones Average index funds (47%), followed closely by real estate investment trusts (45%) and mutual or exchange traded funds (44%).
  • Bad investments for this year are expected to be general obligation non-revenue bearing municipal bonds (12% “good”), revenue bearing or project backed municipal bonds (22%) and corporate bonds (22%).

In favor sectors: bio-technology, tech, pharmaceuticals;

Out of favor sectors: consumer discretionary, aerospace, tourism, insurance;

In favor countries: U.S., Brazil;

Out of favor regions: Middle East, Russia.

  • Good investment sectors for 2013 in the eyes of Boston investors are biotechnology (80%; up from 71% in Q1 2013 survey), technology (79%; up from 64%) and pharmaceuticals (70%).
  • At the other end of the spectrum, the consumer discretionary (18%), aerospace (23%), insurance (29%) and tourism (29%) sectors were among the least favored.
  • Among national investors, countries identified as “good” places to invest are: U.S. (52% “good”), China (41%), India (39%) and Japan (38%).
  • However, Boston investors view the U.S. (56% “good”) and Brazil (40%) more favorably, and China (32%) less favorably.
  • Among Boston investors, the Middle East (6% “good”) and Russia (6%) are seen as offering far weaker investing potential. 

Real estate viewed as top alternative investment 

Boston’s millionaire investors, a subset of all area investors polled, see themselves as more knowledgeable about alternative investments (48%) than investors nationally (40%), and more than seven in ten choose real estate.

  • 73% of Boston millionaires invest in real estate as an alternative investment.
  • 32% of millionaire respondents plan to invest in real estate in the next 12 months.
  • Hedge funds are the first alternative investment vehicle that comes to mind for Boston millionaires (32% name them), but just 13% have invested in hedge funds and just 9% plan to in the future.
  • 57% of millionaire investors would not consider investing in a historic company in a struggling industry such as fishing or dairy.

Climate impacts views on oceanfront real estate

  • 58% of Boston investors are less likely to buy oceanfront property because of rising ocean levels or increased erosion.

Most wealth will be passed to children

A majority of Boston high net worth investors (61%) plan to transfer their money or other assets to their heirs at some point during their lifetime.

  • Family first: 89% plan to transfer wealth to their children during their lifetime.
  • Just 19% plan to transfer wealth to charity and 11% plan to transfer wealth to a school or university during their lifetime.
  • Wealth transfer is not a one-way street; 37% of high net worth Boston investors expect to benefit from a wealth transfer, with 82% expecting a transfer from a parent or in-law.

Financial advice is in high demand 

The 77% of Boston investors who use a financial advisor expect an array of services:

  • 88% want guidance on their portfolio asset allocation;
  • 87% want clear communication on how assets can contribute to a retirement income stream;
  • 85% want both analysis of the economy and potential portfolio impacts;
  • 82% want new investment ideas;
  • 81% want guidance and resources on changes in the federal tax policy and exemptions; and
  • 81% want downside portfolio protection.

Morgan Stanley Wealth Management, a global leader, provides access to a wide range of products and services to individuals, businesses and institutions, including brokerage and investment advisory services, financial and wealth planning, banking and lending, cash management, annuities and insurance, retirement and trust services. 

Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services.  The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 43 countries.  For further information about Morgan Stanley, please visit www.morganstanley.com.

©2013 Morgan Stanley Smith Barney LLC.  Member SIPC

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Survey Methods: as part of the national survey of 1,004 US investors, age 25 to 75, with $100,000 or more in investable household financial assets, an oversample of approximately 300 Boston area investors were interviewed. Quotas were applied in order to obtain approximately one-third in each of the following categories: $100K to $499K, $500K to $999K, and $1 million or more in investable assets. Results were then weighted to age within each of these three asset classes using the Federal Government’s Survey of Consumer Finances data. Poll conducted Oct. to Dec, 2013, by GfK Public Affairs & Corporate Communications.

Previous poll conducted Jan. to March, 2013, by GfK Public Affairs and Corporate Communications following similar methodology.

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