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Press release from Business Wire

What is Old?: UBS Investor Watch Report Finds Wealthy Investors Say

<p class='bwalignc'> <i>9 out of 10 working investors anticipate a long, multi-phased retirement</i> </p>

Monday, October 21, 2013

What is Old?: UBS Investor Watch Report Finds Wealthy Investors Say "80 is the New 60"

12:12 EDT Monday, October 21, 2013

NEW YORK (Business Wire) -- UBS Wealth Management Americas (WMA) today released its quarterly UBS Investor Watch report, revealing that most wealthy investors' do not feel "old" until they are 80, a significant shift from their parent's generation when "old" was perceived to be around age 60. The report found that only 16% consider retiring as a sign of being "old", and Americans define old as the loss of individual independence, marked by no longer living in your own home (71%) and driving your own car (67%)

Investor Watch is a quarterly publication analyzing investor sentiment and behavior, designed to provide a window into investors' current, core, and often shifting priorities.

"People do not see retirement as a sign of being old, as it was for their parents," says Emily Pachuta, Head of Investor Insights, UBS Wealth Management Americas. "What we're hearing from people is that age is nothing more than a number and the age when people feel old has gone way up."

Retirement seen as having three distinct phases

The UBS Investor Watch report found investors do not expect a direct break from work life into a leisurely retirement. Rather, 90% of working investors under the age of 65, or “pre-retirees,” believe they will experience three distinct phases of retirement over the course of multiple decades (the anticipated duration of each phase indicated in parentheses):

I. Transition (5-10 years): Reduced work hours, departure to start a new business or career, or increased volunteerism.

II. My Time (10-15 years): Focus on travel and leisure activities.

III. The Last Waltz (10-15 years): Slowing down with heightened focus on health issues and losing independence.

"What investors are telling us is that retirement is one word, but it is not one phase," Pachuta noted. "People now see retirement as being one third of their expected life, and it is marked by distinct phases each with different wants and needs."

When asked what they would like to be doing at age 65, nearly half of investors indicated "traveling", with 22% desiring to be working. A small portion wants to be spending more time on their hobbies (14%) or spending more time with family (12%). Only a third of investors expect to change homes when they retire.

Investors say that their key financial needs will change as they move through the three phases of retirement with focus on maintaining lifestyle in the first phase, transitioning to an emphasis on cash flow in the second, and finally a spotlight on healthcare in the third phase.

Investor Watch found that pre-retirees continue to underestimate the financial burden of a drawn out transition. Pre-retirees now anticipate only needing 58% of their previous annual income to fund "Phase I", 63% to sustain "Phase II" and 56% to support "Phase III". However, the financial services industry typically uses 75% to 80% of pre-retirement income as the benchmark for financial security.

Familial Financial Support Squeezing Investors

The survey also found that wealthy investors often play an active role in their adult children's financial decision-making, as well as that of their parents. Sixty percent of investors indicated that they play the role of “sounding board” for their adult children when it comes to investment decisions, with only 10% playing a primary or joint role in decision-making. Conversely, one-third of investors either make the decisions for their parents or are always or almost always consulted on key financial decisions – a number which increases as the parent(s) ages. An earlier issue of Investor Watch found that 4 out of 5 investors were providing some direct financial support to adult children.

“ At the same time, adult children are delaying maturity, living at home longer and relying on their parents for financial advice and support well into adulthood, indicating to us that there is much more of a sliding scale to the age at which financial obligations lessen than we have previously encountered.” says Pachuta.

Additional highlights include:

  • At 65, pre-retirees would rather globetrot: Investor Watch found that nearly half of investors ideally want to be traveling at age 65, as compared to the 22% of respondents who said they want to still be working in some capacity at that age.
  • Economic outlook has declined in the last quarter: Investors are evenly split on the short-term economic outlook (next year), with 36% optimistic and 37% pessimistic. Optimism is down from 42% in July and 47% in April. Mid-term outlook (3-5 years) is more positive (49% optimistic and 24% pessimistic), but still down from July (56% optimistic). Long-term outlook (10+ years) is the most positive (56% optimistic, 18% pessimistic), but is down slightly from 60% optimistic in July. Investors continue to believe the U.S. economy is in fragile recovery mode (86% agree). Most investors expect the market will be volatile in the next 6 months (76%), but this is actually down from 81% in July.
  • Investor confidence skyrocketed over the last year: Investors' confidence in their own financial situation has increased from a year prior: 63% of respondents say they are very good or excellent about their financial situation now, compared to 44% who responded similarly in September 2012. HNW and affluent investors are evenly divided on their short-term economic outlook over the next year, with 36% indicating that they are optimistic and 37% responding that they are pessimistic. Investor optimism increase over the medium and long term, however fewer investors (24%) now anticipate the U.S. making progress on reducing the national debt over the next year than they did in July 2013 (30%). Investors continue to be more concerned about avoiding losses (69%) than missing out on market gains (31%).
  • Rising real estate values are a bright spot in the economy: Nearly half of investors indicated that they believe rising housing prices are having a positive impact on the economy, and almost 40% said that they are improving their personal financial situation. This is especially true for investors with outstanding mortgages (44%). The vast majority of investors (74%) expect real estate prices in their area to continue this upward trend over the next year, making them less likely to purchase real estate over that time period.

We invite you read the full report here: www.ubs.com/investorwatch

Methodology

The survey was fielded from September 24 – 30, 2013. It was an online, blind survey conducted of investors and clients using an external vendor (Research Now). Respondents must be at least equally involved in household financial decisions and have a financial advisor. 2,319 investors completed the survey, 1,130 HNW ($1M+ investable assets), 1,189 Core Affluent ($250k - $1M). Results weighted by region and UBS / non-UBS to account for oversamples.

Notes to Editors

About UBS Wealth Management Americas

UBS Wealth Management Americas provides advice-based relationships through financial advisors who deliver a fully integrated set of products and services specifically designed to address the needs of ultra-high net worth, high net worth and core affluent individuals and families. It includes the Wealth Management U.S. business, the domestic Canadian business and the international business booked in the United States.

About UBS

UBS AG and its subsidiaries draw on a 150-year heritage to serve private, institutional and corporate clients worldwide, as well as retail clients in Switzerland. Its business strategy is centered on its pre-eminent global wealth management businesses and its universal bank in Switzerland. Together with a client-focused Investment Bank and a strong, well-diversified Global Asset Management business, UBS will drive further growth and expand its premier wealth management franchise.

UBS is present in all major financial centers worldwide. It has offices in 57 countries, with about 35% of its employees working in the Americas, 36% in Switzerland, 17% in the rest of Europe, the Middle East and Africa and 12% in Asia Pacific. UBS employs about 62,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).

Media Inquiries
New York:
Gregg Rosenberg, 212-713-8842
Follow us on Twitter: @UBSAmericas

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