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UBS Investor Watch indicates increasing HNWI confidence


Despite being increasingly concerned about the political environment in Washington and their personal ability to afford long-term care, high net worth investors (HNWI)  are feeling better about their own financial situation, according to UBS Wealth Management Americas’ second UBS Investor Watch report.

UBS Investor Watch indicates that long-term care concerns have surpassed retirement issues as the most critical of investors’ personal finance worries for the future. Still, investor confidence in their personal financial situations was at higher levels in January than before the US elections.

“The continued uncertainty in Washington is having a tremendous effect on investors,” says Paula Polito, client strategy officer of UBS WMA. “Today, we are seeing long-term care trump retirement as investors’ number one personal concern. The need for advice is even more critical in this environment.”

The political environment in Washington caps investors’ list of top concerns. Three in four investors (76 per cent) are worried about the political environment in Washington, with 60 per cent stating they are dissatisfied with the recent Congressional agreement to avert the fiscal cliff.

Government “kicking the can” impacts investors’ willingness to invest, return expectations and long-term outlook: 60 per cent of investors are dissatisfied with the fiscal cliff agreement, and 90 per cent feel the deal did not do enough to address the national debt problem. With that in mind, investors indicated a decline in long-term economic optimism, and they are continuing to adopt a wait-and-see mindset toward investing as Washington works through outstanding fiscal cliff issues.

The ability to afford healthcare/support in old age is the top concern among investors, with 26 per cent agreeing it’s their main worry versus 14 per cent who said having enough money for retirement was their primary fear. Nearly three in four investors (73 per cent) listed “staying healthy / fit” among their top three objectives, versus one in four (26 per cent) who said the ability to retire when and how they want is a top-three goal.

However, investors feel more confident about their own financial situation than three months ago: 56 per cent of investors say they feel “very good” or “excellent” about their financial situation, compared with 44 per cent as indicated in the October 2012 Investor Watch report. And investors who consistently follow their own financial plan feel markedly better about their finances, with 73 per cent saying they feel “excellent” and “very good.”

Finally, investors believe that advice is central to achieving goals in this environment. Overall, 68 per cent say receiving good advice is highly important to achieving their goals. And in particular, relating to recent events – post-election and prior to the fiscal cliff – investors were twice as likely to take action if they spoke with their advisors about these topics. Among investors who sought advice about the election, 76 per cent were highly satisfied with the advice they received.

The UBS Investor Watch survey was conducted among 2,056 investors, including current UBS clients. Investor Watch will continue to track overall investor objectives and concerns toward US economic factors, as well as geopolitical events, each quarter.

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