Survey Says Investors Are Fundamentally Changed

The majority of individual investors (58%) say they’ve lost faith in the stock market and nearly half are not likely to ever put more money into the market, according to a new survey by Prudential Financial.

Furthermore, nearly three in four Americans (72%) agree that they need to think differently about saving and planning for retirement. Investors are re-thinking their financial and retirement planning strategies in the aftermath of the recession, and acknowledge that new approaches are needed to make up for lost ground, according to the survey, The Next Chapter: Meeting Investment & Retirement Challenges.

Most investors (73%) believe the investments they have today are not enough to make up for the losses they’ve experienced over the past few years, according to the survey. Many have invested more conservatively coming out of the financial crisis. Today only 37% of the respondents described their portfolios as aggressive, versus 46% prior to the recession. Similarly, 40% say they have a conservative portfolio today, compared with 33% pre-recession.

When it comes to their investing strategies, 61% of those surveyed believe the principles of investment diversification and asset allocation have changed. Also, while investors want and know they need growth, protection is at the forefront, with 60% stating they are looking for guarantees to protect their financial future.

“Mutual 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,” said Judy Rice, president of Prudential Investments.            



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

“It’s clear that the financial crisis has driven fundamental changes to the way Americans are saving for retirement, with millions of Americans perhaps at even greater risk of having insufficient income for a secure retirement,” said Christine Marcks, president of Prudential Retirement. “Despite the fact that we are seeing some positive signs—such as increasing contributions to 401(k)s and other retirement savings vehicles—the lower interest rate environment and more conservative investing will require Americans to save even more if they are to achieve their retirement goals.”

The survey polled 1,274 Americans in an online survey through January 5, 2011. A full copy of the report can be found at