Boomers and Advisers Show Interest in Non-Traditional Investments

April 12, 2011 ( - Both Baby Boomers and financial advisers remain concerned about market volatility in retirement accounts, a new MetLife poll shows.

MetLife’s Market Volatility Poll disclosed a strong desire among financial advisers to seek other options beyond traditional asset allocation models in confronting market risk and volatility. Half of advisers (51%) agreed that alternative investments are needed to better manage volatility — the same percentage disagreed that “a mix of stocks, bonds and cash” is enough to manage volatility in their clients’ retirement portfolios.  Moreover, 57% of advisers are interested in a “product that could provide more consistent returns.”    

Boomers lagged behind advisers in awareness of alternatives, with almost two-thirds (64%) saying they are unsure about whether “retirement portfolios need to be managed differently in today’s economy.” However, there was corresponding uncertainty about traditional investment strategies as well — 58% are unsure whether “retirement portfolios should be set and left for the long term. “  At the same time many Boomers (42%) unfamiliar with alternative investments wanted to learn more.   

According to a press release, younger boomers and sophisticated investors were most open to getting information about alternative investments: – 61% of those ages 45-54 and 45% of those ages 55-64 who are unfamiliar with alternatives want to learn more, compared with just 23% of those over the age of 65. Those Boomers who described themselves as sophisticated investors expressed considerable interest in alternative products – 58% would like to be educated, the MetLife survey found.  

More than one-half (54%) of  Boomers and 58% of advisers  cited 10%  or less as their comfort zone for volatility, and one-fourth of Boomers  were only at ease with 5% or less.  Underscoring uneasiness about retirement security, only 32% of Boomers expressed confidence in their investments, a finding highlighted by the fact that almost one-half (45%) said that they check their account balances at least once a week.   

The link between volatility and client wariness is a strong one in the eyes of advisers — 88% said that seeing volatility in their retirement accounts raised clients’ concerns about retirement and financial security, while 56% of Boomers say the same.  Still, the press release said, Boomers are taking a more balanced stance now as they invest for retirement than was the case in the aftermath of the financial crisis two years ago. At that time, three fourths of this group expressed a preference for protecting against losses versus participating in market gains, according to a MetLife survey in 2009. Now, there is roughly a 50-50 split in preferences between protecting and participating in gains.  

MetLife’s Market Volatility Poll, fielded in February of this year, included 520 financial advisers and 1,038 adults over the age of 45 with at least $100,000 in investable assets.