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Americans report fundamental changes in investment behavior,according to Prudential survey

^{Published on 2011-06-03 10:20:44 - Market Wire}
 

NEWARK, N.J.--([ BUSINESS WIRE ])--The majority of individual investors (58 %) say theya™ve lost faith in the stock market and 44 percent say they are not likely to ever put more money into the market, according to a new survey by Prudential Financial, Inc. (NYSE:PRU). Furthermore, many respondents reported that they have invested more conservatively coming out of the financial crisis.

"The findings are consistent with the trend we are seeing toward many investors including annuities in their portfolios to provide a guaranteed floor for their retirement income."

The study shows that investors are re-thinking their financial and retirement planning strategies in the aftermath of the crisis, and acknowledge that new approaches are needed to make up for lost ground. Nearly three in four Americans (72%) agree that they need to think differently about saving and planning for retirement, according to the study, a[ The Next Chapter: Meeting Investment & Retirement Challenges ],a which looked at Americansa™ financial behavior in the wake of the financial crisis.

When it comes to their investing strategies, 61 percent of those surveyed believe the principles of investment diversification and asset allocation have changed. Many are taking a more conservative approach to their portfolios. Today, only 37 percent of the respondents describe their portfolios as aggressive, versus 46 prior to the recession. Similarly, 40 percent say they have a conservative portfolio today compared with 33 percent pre-recession.

aThese findings are consistent with what wea™re seeing in the marketplace,a said Judy Rice, president of Prudential Investments. aMutual fund investors are beginning to behave much more like institutional investors and are just as focused on managing risks as they are on generating good returns. As a result, they are looking to real assets and market neutral and fixed income products to protect against the threat of inflation and market volatility.a

Most investors (73%) believe the investments they have today are not enough to make up for the losses theya™ve experienced over the past few years, according to the survey. While they want and know they need growth, protection is at the forefront, with 60 percent stating they are looking for guarantees to protect their financial future.

aAmericans clearly recognize the need for new approaches to retirement planning, with almost seven in 10 saying guaranteed lifetime income products are appealing,a said Stephen Pelletier, president of Prudential Annuities. aThe findings are consistent with the trend we are seeing toward many investors including annuities in their portfolios to provide a guaranteed floor for their retirement income.a

While the study shows that seven out of 10 respondents say that they have taken steps to improve their financial situation, such as increasing and re-allocating investments in workplace retirement plans, the study highlights the dilemma that Americans face by pursuing a more conservative approacha"that is, they may fall short on achieving their retirement goals.

aIta™s clear that the financial crisis has driven fundamental changes in the way Americans are saving for retirement, with millions of Americans perhaps at even greater risk of having insufficient income for a secure retirement,a said Christine Marcks, president of Prudential Retirement. aOne solution may be to include guaranteed income products within workplace retirement plans, which can be structured to provide downside protection as well as the opportunity for growth. Also, despite the fact that we are seeing some positive signsa"such as increasing contributions to 401(k)s and other retirement savings vehiclesa"the lower interest rate environment and more conservative investing will require Americans to save even more if they are to achieve their retirement goals.a

The survey polled 1,274 Americans in an online survey through January 5, 2011. For a full copy of the report, please visit [ http://www.news.prudential.com/ ].

Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has operations in the United States, Asia, Europe, and Latin America. Prudentiala™s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. In the U.S., Prudentiala™s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit [ http://www.news.prudential.com/ ].