US millionaires cautiously optimistic

A new survey shows that millionaires, who currently have a negative attitude about the state of the U.S. and global economies, are optimistic that improvements to the investment climate will improve a year from now.

The annual survey, commissioned by Fidelity Investments and released April 29, shows an improvement in the attitudes and behaviour of the high-net-worth segment of the population, based on survey results from last year.

“Just over a year ago, millionaires were cautious when predicting the state of the U.S. economy by the end of 2007, something which happened to prove fairly accurate,” said John W. Callahan, president, Fidelity Institutional Wealth Services. “For this year’s survey, the reverse is true, although their future confidence is a bit tempered.”

Callahan believes that the national survey is an important indicator for the U.S. domestic and global economies, as “millionaires’ attitudes and behaviours could be seen as a harbinger for economic stabilization beginning in early 2009.”

Emily Chien, senior vice-president for Fidelity Registered Investment Advisor Group, explains that the company’s analysts were surprised to see how “cautious” millionaires were about the future, despite “coming off a strong market year.”

Their cautious perspective “reminds all of us that past performance is not always an indicator of future success,” says Chien. The survey found that the skepticism of future economic conditions is driven by a tentative outlook for the stock market and the value of real estate, in particular. Yet, despite the cautious nature of the HNW clients, only 6% plan to decrease their exposure to stocks this year while 30% plan to increase their stock holdings.

Millionaires view a reduction in investment activity as a “good opportunity to buy,” says Chien.

The national survey was conducted by Burke Inc., on behalf of Fidelity Registered Investment Advisor Group, and included more than 2,500 financial decision makers at households with at least $1 million in investable assets, excluding workplace retirement accounts and real estate, in the U.S.

Originally published on Advisor.ca on May 15, 2008