CHICAGO, July 17, 2003 (PRIMEZONE) -- As the U.S. emerges from a difficult three-year bear market, the hangover from the 1990s overindulgence in equities is evident in investor attitudes. A new Spectrem Group Perspective entitled, Asset Allocation Shifts by Affluent Investors: How Should Financial Providers Respond?, examines a dramatic shift away from equities and toward investments such as real estate. "After years of stable overall asset allocation levels, for the first time we find that affluent individual investors have a dramatically lower allocation toward investable securities, particularly the wealthiest households," observes Ken Paterson, Spectrem Director and author of the Perspective. "While asset valuation declines clearly contribute to this reallocation, clients have actively turned to real estate since 2000."
Drawing on proprietary research, Spectrem finds a noticeable shift away from individual equities to managed investment offerings, including investment management accounts, mutual funds and professionally managed trust accounts. Investment real estate holdings increased dramatically, with 18% of assets of households with a net worth above $3MM devoted to this asset class.
The report analyzes four net worth segments in detail in terms of holdings. The lowest net worth class, those with $500K-$1MM net worth, has seen their liquid holdings remain flat at 38%, while a much larger proportion of their holdings are in real estate, particularly their primary residence. Their combined real estate holdings are now 43% of total assets, dramatically changing the opportunity for financial services firms concentrating exclusively on marketable securities. "Clients across all four segments need much more help in evaluating their financial holdings and taking action to reallocate their overall portfolio in order to achieve their long range objectives," notes Paterson.
In addition to extensive charts and graphs, the report includes a discussion on the strategic implications and actions firms should consider in this new environment. This and other Perspectives covering issues in the affluent and retirement plan markets are available through www.spectrem.com.
Spectrem Group is a strategic consulting firm specializing in the affluent and retirement markets. Spectrem integrates fact-based information with expertise in building business, marketing, custom research, and merger and acquisition strategies for clients.