More Experienced/Affluent Share Investing Advice

The top five decisions were:

• Changing my spending habits so I could save/invest more;
• Developing a financial plan;
• Beginning to work with or increasing the role of my financial adviser;
• Invested in products other than just stocks and bonds; and
• Taking a more global approach to investing.

A significant majority (70%) of the investors surveyed believe the investment environment that future generations face will be more difficult than the one investors face now. Those between the ages of 55 and 64 are most likely to make this prediction—82% believe it will be more difficult for future generations. Only 6% expect the future environment to be “easier” while less than one-quarter (24%) believe it will be about the same.

Asked what counsel they might offer the next generation facing this challenging future, respondents said:

• Start investing early in life;
• Make sure you understand what you invest in;
• Avoid short-term decisions based on emotions;
• Make a plan and stand by it over time; and
• Employ a professional adviser.

Only 30% suggested the next generation should be cautious about taking risk.

Even though Legg Mason’s Global Income Survey finds the majority of affluent investors are confident they will have enough money to live the lifestyle they want in retirement (88%) and are confident in their ability to retire at the age they want to (86%), these same investors are also aware of how certain factors could potentially derail their retirement plans. Issues they fear include having an event that consumes their retirement funds, outliving their retirement funds, saving too little, the government reneging on obligations (e.g., Social Security), and a low-interest rate environment.

According to Matthew Schiffman, managing director and head of global marketing at Legg Mason Global Asset Management, recent events such as the financial crisis have made current investors more aware of how retirement savings can be unpredictably and negatively affected. “We encourage financial advisers and investors to take a realistic approach when planning for retirement, which we call ‘realtirement.’ It includes trying to anticipate the unpredictable. For instance, have you planned for your long-term living situation? What if you suddenly need assisted living or even greater care? Are you prepared for that event? We all need to be.”

Among the U.S. investors surveyed, the primary goal of investing is to “provide for my own retirement.” Other goals included:

• Maintaining my current lifestyle later in life;
• Protecting my wealth;
• Growing my wealth; and
• Generating income for living expenses.

Asked about their progress toward these goals, 41% of those ages 40 through 54 said they were not making progress to “provide for my own retirement”; 46% of those 55 through 64 said they are not making progress toward “maintaining my current lifestyle later in life”; more than four in 10 (42%) said they are not doing very well in their progress toward “protecting my wealth”; and 53% of those 55 through 64 said they were not doing very well toward the goal of “growing my wealth.”

The Legg Mason survey was conducted among 4,320 affluent investors (minimum $200,000 in assets as measured in U.S. dollars) from 20 countries, including the United States. The U.S. survey findings are from among 500 affluent investors. Respondents were surveyed online by Northstar Research Partners, on behalf of Legg Mason, from December 2013 to January 2014.