A new report by MFS Investment Management has found that Gen X and Gen Y investors (those under age 46) remain conservative since the recession, and that these two groups of investors are confused about how to invest.
Bill Finnegan, director of Global Retail Marketing for MFS, said in a statement announcing the survey results that many Gen X/Y investors consider themselves to be savers, not investors, and that they are looking to investments “to generate income instead of capital appreciation for long-term goals.” What’s more, he said, while these investors “have accumulated a fairly significant amount of wealth,” they “don’t have a strong affinity for or with financial advisors.”
The main reason that Gen X/Y investors do not have an advisor is perceived cost: 53% of Gen X/Y said it was not worth paying for advice. Other reasons cited: 33% said they did not need an advisor because “they do it themselves or use friend/family member”; 22% cited a lack of trust; 28% felt they did not have enough money to warrant an advisor; 10% do not know how to go about finding an advisor; and 12% reported never being contacted by an advisor.
MFS, through Research Collaborative, an independent research firm, sponsored the survey of 613 consumer investors with $100,000 or more in household investable assets between Aug. 26 and Sept. 1, 2010. The survey found that by more than two to one (49% to 22%), Gen X/Y reported that “now is a great time to invest in the stock market,” but almost two to one responded that “I am overwhelmed by all the different choices available to me” and have nearly an even split (27% to 28%) agreeing and disagreeing that “government bonds are the best place to put your money right now.”
The study found that Gen X/Y appeared to be more “gun-shy” about the stock market than other groups, with 35% agreeing with the statement: “After what has happened in the markets the past few years, I’ll never feel comfortable investing in the stock market.” Older groups surveyed agreed with this statement at about a rate of one in four, the study says. Furthermore, 30% of Gen X/Y reported that generating income was the most important investment objective today vs. approximately 20% for older generations surveyed.