Wealthy investors’ biggest fear is political dysfunction, UBS found in its first-quarter Investor Watch for 2013. Concerns over political issues outweigh even retirement fears, with more than three-quarters of respondents saying the political environment worries them most.
UBS polled more than 2,000 respondents with at least $250,000 who use a professional advisor in early January. About one-fifth of the respondents were UBS clients.
Just 37% of respondents said they were satisfied with the fiscal cliff deal announced on Jan. 1. Ninety percent of respondents said that while the agreement may have avoided the cliff, it didn’t do enough to address the debt problem. In fact, nearly a third of respondents expressed doubt that the government would make any serious progress on cutting debt this year.
The lack of faith in the government’s ability to address those long-term issues resulted in a drop in investors’ mid- to long-term outlook, according to the UBS poll. However, despite the widely felt concern over political issues, over half of respondents said they were confident about their own financial situation, up from 44% in September.
UBS noted in the report detailing the poll findings that today’s investors are “adaptive creatures.” According to the report, “Neither euphoric nor despondent, [investors] are more pragmatic and reasonable, with tempered return expectations and less optimism about the long-term economic outlook—while acknowledging that participating in the markets is necessary to grow their wealth.”
To that end, just 23% of respondents said they were attempting to beat the market; the majority were just trying to track it. One-quarter said they would be OK with underperformance in up-markets if it meant they wouldn’t lose anything in down-markets.