Over the past 12 months, there has been a sharp drop in the percentage of investors across all age groups who plan to purchase real estate within three to five years, according to an annual survey released today by the MainStay Investments division of New York Life Investment Management LLC.

The MainStay Across Generations Survey was conducted by an online research firm during the spring of 2005. The survey polled 1,537 individuals 26 to 82 on their investment attitudes, behaviors, objectives and priorities. Respondents were U.S. residents with a total net worth of at least $100,000. “GenXers” are defined as people 26-40, “Boomers” are defined as 41-59 and “Matures” as age 60-82.

New York Life Investment Management LLC and its affiliates provide a range of investment services to institutional, individual, corporate, public, and Taft-Hartley clients, including institutional asset management, retail investments, retirement services, guaranteed products, real estate investments, and alternative investments.

In 2005, 13 percent of GenXers plan to add real estate, the survey found, compared with 32 percent in 2004, the study found. Five percent of Boomers plan to add real estate, compared with 18 percent in 2004. And 6 percent of Matures in 2005 plan to add real estate, down from 16 percent in 2004.

“Though most media signs point to a never-ending real estate boom, actual investor intentions from the Generations survey indicate fewer assets allocated to future real estate purchases,” said Beverly Moore, managing director of Wealth Strategies at MainStay Investments.

“Whether or not this means the real estate market is cooling off, there are some very real opportunities out there for advisors to help investors select other investment options for those assets, because if they aren’t sinking large sums into real estate, they have to put it elsewhere,” she added.

Across all age groups, investors acknowledge they need help managing their investments, according to the study. Half of GenX investors, 46 percent of Boomers and 45 percent of Matures said they believe they “need the help of professionals,” up roughly 10 percent across the board from 2004. Among investors who do not currently have a financial plan, 56 percent of GenXers and 39 percent of Boomers said they expect to need one in the future, up from 50 percent and 35 percent respectively in 2004.

Reversing the trends of 2004, investors across all age groups are seeking out more conservative investment options, Mainstay Investments reported. An exuberant market in the 12 months preceding the survey in 2004 may have led investors to feel comfortable with a more aggressive approach, according to the announcement today. This was followed by a much weaker 12-month period ending in February 2005 (6.96 percent). Following this, 26 percent of GenXers report their investment styles as conservative in 2005, up from 19 percent in 2004. Similarly, 40 percent of Boomers and 49 percent of Matures now identify themselves as conservative investors, up from 28 percent and 39 percent, respectively, in 2004.

“Investors who change their investment approach – and shift assets as a result – based on the recent history in the capital markets are far more likely to do damage to their long-term financial well-being than those who follow a comprehensive financial plan,” said Moore. “We’re seeing a real disconnect between investors’ attitudes and their lifetime goals. They’re driving by the rear-view mirror.”

Additional findings of the survey reveal:

  • Five years after the peak of the dot-com investing era, more investors admit they need help to save and to plan for those savings. While “not having enough discretionary income” is the most frequently cited reason for not saving or investing more – mentioned by approximately half of all survey respondents – a significant percentage of investors procrastinate and/or lack confidence;

  • Eleven percent of the GenXers 10 percent of the Boomers said they simply “haven’t gotten around to” saving/investing more;

  • More than one in seven (14 percent) of GenXers and Boomers – and 8 percent of Matures – said they “don’t have enough time/financial knowledge to make prudent investment decisions”;

  • Today, approximately half of GenXers work with an investment professional of some kind, MainStay Investments reported. In addition, about 21 percent expect to begin working with a financial advisor over the next three to five years, as do 14 percent of Boomers;

  • GenX and Baby Boomer investors – a combined population nearly 133 million strong – are holding cash out of the market. About 37 percent of GenXers, 32 percent of Boomers and 23 percent of Matures have moved cash to the sidelines over the past six months;

  • Less than 5 percent of all investors have reduced their cash holdings;

  • Non-retirement assets for Boomers declined to 57 percent in 2005 from 79 percent in 2004;

  • Three-quarters of GenXers and Boomers – and 57 percent of Matures – are interested in investing in mutual fund-of-funds.

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Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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