Morgan Stanley Wealth Management Investor Pulse Poll

Transcription

1 Morgan Stanley Wealth Management Investor Pulse Poll National Report December 2014

2 Table of Contents Executive Summary 3 The State of the Economy and the Investment Climate 6 Concerns about Investing and the Economy 7 Investment Sectors 10 Investment Considerations and Portfolios 12 Investment in the Energy Sector 14 Energy Knowledge and Options: National and Personal 16 Societal and Investment Impact of Climate Change 17 Use of Financial Professionals 19 [SPACE for: Regional Focus] 20 Methods 21 Contacts 22 2

3 Executive Summary Morgan Stanley releases findings from the Morgan Stanley Investor Pulse Poll of 1,008 U.S. high net worth (HNW) investors age 25 to 75 with $100,000 or more in investable household financial assets. Approximately one in five (21%) of all U.S. households fall into this group representing approximately 24 million households (defined to exclude assets held in real estate and employer retirement plans). 1 The poll was conducted from October 14 through December 2, 2014 and includes interviews with hundreds of households that report investable household financial assets of $1 million or more (approximately 33% of those interviewed) yielding a robust look at a group that makes up only 3.6% of total US households. 2 All told, households with $100,000 or more in investable assets account for 94% of total investable assets by value. 3 All results reported are from the Morgan Stanley Investor Pulse Poll. Three in four High Net Worth (HNW) investors feel the national economy will be the same or better in 2015 (76%). Roughly the same proportion feel the global economy will be the same or better, although the better rating is stronger for the US economy than for the global economy. Few see trouble for their local economy: 87% see it as the same or better in HNW investors are optimistic about the near future of their own investment portfolios. Over nine in ten (93%) expect their portfolios to stay constant or improve in the coming year with about half (48%) expecting improvements; this is noticeably higher than optimism about the investment climate. Expected gains are especially high among millionaires with 59% saying they anticipate that their household s investment portfolio will be better within the year. Increased foreign conflicts tops the list of HNW investors concerns (cited by 86%). Other macro issues occupy the second through fourth slots of concerns, as the effects of terrorism in the US (81%) ranks second, followed by the domestic economic issues of the government budget deficit (80%) and the increasing income gap between poor and wealthy Americans (79%). Not only does concern about foreign conflicts, the government budget deficit and the increasing income gap top the list of issues, but these topics also stand out for the intensity of concern they stimulate. Among both millionaires and HNW investors as a whole, half are very concerned about these issues. On average, HNW investors report that 42% of their current portfolio reflects issues of personal importance. Among eleven issues of personal importance, healthy living (89%) tops the list, followed closely by education (87%) and conservation of water (83%). Social justice, poverty, waste management, entrepreneurship and clean energy are of personal importance to at least three in four HNW investors. Importantly, many investors are aligning issues of personal importance with their portfolio. Fully half of all HNW investors (51%) report that the issues which are important to them affect their investment decisions. Among HNW investors, the investment viewed most favorably for 2015 (among 14 examined) is dividend-bearing stocks, cited by 57% as a good prospect. Second is S&P 500 Index funds (51%), followed by mutual or exchange traded funds (49%), Dow Jones Average Index funds (46%) and a cash position (43%). In the view of HNW investors, the top investment sector for the coming year is Technology (cited as good by 87%), followed by Bio-tech (75%), Pharma (71%), Energy (69%) and Healthcare 1 According to aggregated data using results of the Federal Reserve s 2010 Survey of Consumer Finances, 21% of all US households have nonretirement financial assets of $100,000 or more and are of age 25 to A statistical Analysis of the Survey of Consumer Finances Data. October 2010, a CEB data analysis of the Federal Reserve Board s 2010 Survey of Consumer Finances. 3 A statistical Analysis of the Survey of Consumer Finances Data. October 2010, a CEB data analysis of the Federal Reserve Board s 2010 Survey of Consumer Finances. 3

4 (65%). In a second tier are communications (62%), natural resources (54%) and real estate (51%) also are seen as positive investments for The United States is the only country that a majority of HNW investors regard as a good investment for At 74%, this is fully 32 percentage points higher than the next country, Japan (42%). Following the US and Japan are India, China, and Western Europe (40%, 38% and 36%, respectively). A neutral investment outlook is more prevalent than a positive outlook for Western Europe and Brazil. Russia, Ukraine and the Middle East hotbeds of conflict are cited as good investments by only 4%, 3% and 4% of HNW investors, respectively HNW investors view conflict negatively and when asked directly about the topic, fully 90% of HNW investors are at least somewhat concerned about international investing due to ongoing foreign conflicts; 56% are very concerned about conditions for international investing. Thinking specifically about personal investment allocations for 2015, stocks or equities are expected to comprise the biggest part of HNW investors portfolios (44%). About equal proportions of the portfolios will be in cash (21%), fixed income vehicles (18%) and other investments (17%). Compared with HNW investors as a whole, millionaires are even more likely to say their portfolios will be in stocks or equities (49%). But they are less likely to say they will keep their money in cash or other miscellaneous investments on the market. When presented with ten investment actions related to those issues of personal importance, 41% of HNW investors envision investing in clean energy funds in the next 3 years, the number one option. Nearly as many, 40%, anticipate investing in healthcare-based funds. At least one in three HNW investors expect to utilize positive screening (38%), negative screening (36%), investing in funds which focus on positive social/environmental change (35%) and community investing (33%) in the next 3 years. Currently, investors estimate that 15% of their portfolio is currently allocated toward the energy sector. Asked to consider the prospects for various types of energy investments in 2015, the top four (of 10) are a mix of traditional an alternative energies: natural gas (76%), solar (61%), petroleum-based such as oil and gasoline (53%) and wind (52%). Performance and policy factors affect HNW investors approach to energy investments. Their top consideration is the bottom line (91% cite the rate of return), followed by past history (87% want to see a track record of success and growth) and diversification (76%). Not far behind, however, are energy independence (72%)and environmental impact 67%. HNW investors behavior and outlook is also informed by high awareness of energy issues. Most, 84%, self-report that they have at least some knowledge of US energy issues and problems. This knowledge leads 88% to agree or that the U.S. should invest in technology and programs designed to increase energy efficiency. When asked for the preference, 58% of HNW investors favor expanding production of alternative energies (wind, solar, biomass) for this purpose, twice as many as prefer to expand production of traditional energies such as oil, gas, coal (29%). Moreover, sixty-five percent of investors express interest in investing in clean energy sources. Solar, wind and geothermal are each seen as good investment prospects in 2015 by at least half of investors. Among the many energy topics which have faced policymakers and HNW investors over the last few years, four take center stage in this survey. In line with preferred methods for expanding energy production, support is stronger for the two solutions which focus on alternative energies than for the two solutions which focus on traditional energies. Fully 80% of HNW investors support the expansion of solar farms and the same percentage support the expansion of wind farms. By comparison, 68% support efforts to develop the Keystone Oil Pipeline System between the US and Canada, while just over half support hydraulic fracturing (fracking) of shale deposits to develop oil and gas resources. 4

5 For many of today s HNW investor s, climate change is real. Two in three (65%) say that climate change is having at least some impact on Earth, with 39% reporting that climate change is having a lot of impact on the planet. Furthermore, 71% say humans are having at least some impact on climate change. However, fewer HNW investors 30% report that climate change is impacting the value of their investments/portfolio. When probed on the possibility of investing in home installation of a sustainable energy system, over half of HNW investors say they plan to invest in 'Smart' home products designed to save energy, such as next generation thermostats or Energy Star rated appliances.for clean energy systems themselves, which typically require significant financial outlays or advanced planning, next year investment plans drop to 18% for solar panels, 9% for a geothermal system and 8% for wind power. In light of their sentiments about climate change, it is of little surprise that 96% of HNW investors plan to take at least one sustainable behavior in the next three years; the top goal is to become better at turning off lights when leaving a room, cited by 67%. At least six in ten hope to install more energy saving light bulbs (64%), conserve water (63%), recycle more (62%) and turn down the thermostat in the winter / turn up the thermostat in the summer to save energy (61%). It should be noted that these are generally small steps which require relatively little expense to perform. When significant costs or a major change in behavior is required, the likelihood to engage in the behavior in the next three years falls considerably. Examples of these more expensive behaviors are replacing appliances with high-efficiency models (50%), purchasing a more fuel-efficient vehicle (38%), installing better insulation in the home (32%) and buying smart products which use less energy (20%). And just 6% anticipate installing solar panels in the near future. Seven in ten HNW investors in the U.S. (71%) leverage the insight of a financial professional. Among all HNW investors, CFPs (22%) and financial advisors (21%) are the most commonly used professionals. No more than one in ten HNW investors uses a CPA (10%), stock broker (9%), CFA (7%), or a lawyer (3%) as their primary investment advisor. HNW investors are open to employing financial professionals in myriad ways. Of 11 possible types of assistance a financial advisor could provide, guidance regarding federal tax policy and clear communications on how assets contribute to a retirement income stream are at the top of the list (both mentioned by 89%). Of nearly as much interest is advisor guidance on asset allocation (88%), new investment ideas from their advisor (86%) and an analysis of the markets and their impact on the portfolio (86%). 5

6 The State of the Economy and the Investment Climate HNW Investors Have Positive Economic Outlook Three in four High Net Worth (HNW) investors feel the national economy will be the same or better in 2015 (76%). Roughly the same proportion feel the global economy will be the same or better, although the better rating is stronger for the US economy than for the global economy. Few see trouble for their local economy: 87% see it as the same or better in Millionaires are more likely than other HNW investors to expect better conditions for the global, national and state economies. Personal Portfolios Expected to Improve HNW investors are optimistic about the near future of their own investment portfolios. Over nine in ten (93%) expect their portfolios to stay constant or improve in the coming year with half (48%) expecting improvements; this is noticeably higher than optimism about the investment climate. Expected gains are especially high among millionaires with 59% saying they anticipate that their household s investment portfolio will be better within the year. Majority Are Confident They Will Reach Their Long-Term Financial and Retirement Goals In line with the optimism HNW investors feel about the growth of their portfolios in the coming year, 89% of this group feel generally confident they will reach their long-term financial goals, and 37% are Economic Expectations In 2015 Global Economy National Economy State Economy Local Economy Investment Climate Investment Portfolio very confident their plans will come to fruition. Nearly all millionaires surveyed (95%) have confidence in reaching their long-term goals, with 64% very confident % 50% 100% Better Same Worse Half of HNW Investors expect improvements to their investment portfolio within the next 12 months, twice as many as expect a better investment climate. 6 Same + Better

7 Concerns about Investing and the Economy Strife, Abroad and at Home, Lead List of Concerns Reflecting recent headlines around the world, such as ISIS in the Middle East to the Russia- Ukraine border war, increased foreign conflicts tops the list of HNW investors concerns in late 2014 (cited by 86%). Other macro issues occupy the second through fourth slots of concerns, as the effects of terrorism in the US (81%) ranks second, followed by the domestic economic issues of the government budget deficit (80%) and the increasing income gap between poor and wealthy Americans (79%). Rounding out the top five is being able to afford quality healthcare at all times (73%). Concerns Among Investors All HNW Investors vs. Millionaires Increased foreign conflicts Effects of terrorism on the US Government budget deficit Increasing income gap between poor and wealthy Americans Millionaires express markedly less concern than HNW investors overall for the effects of terrorism and being able to afford quality healthcare. Afford quality healthcare at all times Social Security for your generation Not only does concern about foreign conflicts, the government budget deficit and the increasing income gap top the list of issues, but these topics also stand out for the intensity of concern they stimulate. Among both millionaires and HNW investors as a whole, half are very concerned about these issues. Fewer than four in ten investors express a comparable level of concern regarding the remaining 12 issues. Enough income for desired retirement Enough money to cover the unexpected Incurring major healthcare expenses Your/Family's financial well-being Being caretaker for older adults What Worries Investors Less? Pocketbook issues comprise a second tier of concerns, such as Social Security for their generation, having enough income for their desired retirement, having enough money to cover the unexpected, incurring major healthcare expenses and their family s financial well-being. Income and assets are a factor in these concerns: there is a double digit percentage point gap for each of these issues between HNW investors and millionaires. Low interest on fixed investments Ability to retire when desired 26 Stability of employment 27 FA's ability to meet expectations All HNW investors Million + in assets For the bottom five issues of concern, the gap between all HNW investors and millionaires register at double digits for three being a caretaker for an older adult, being able to retire when desired, and a financial advisor s ability to meet expectations. Unlike the top concerns, having greater financial means help address these issues. The biggest gap is 7

8 registered for being able to retire at the desired time: 47% of HNW investors are concerned about the subject compared to 26% of millionaires; many of the latter are also likely closer to retirement. Investors Aligning Concerns and Portfolios On average, HNW investors report that 42% of their current portfolio reflects issues of personal importance; 38% of millionaires say the same. Investments in Issues of Personal Importance (among those who say issues of importance impact investment decisions) What are these issues of importance? The Morgan Stanley Investor Pulse Poll examined whether various issues are important to HNW investors and whether these issues of personal importance Average portion of portfolio currently aligned with issues of personal importance impact their investment strategy. Each of eleven issues - reflecting a mix of personal, socio-economic, and environmental issues is cited as of personal importance by a majority of investors. Healthy living (89%) tops the list, followed closely by education (87%) and conservation of water (83%). Social justice (enabling all people to live a fulfilling life and be active contributors to the community) follows in follows in fourth place, cited by 80% as an issue of personal importance. 4 Poverty (79%), waste management (79%), entrepreneurship (78%) and clean energy (77%) round out the issues of personal importance to at least three in four HNW investors. Financial inclusion (65%), climate change (58%) and food (52%) are of relatively less importance. Household assets do not impact the personal relevance of these issues: the importance of each of the eleven topics is essentially the same among HNW investors overall and millionaires. Importantly, many investors are taking the issues of personal importance to their portfolio. Fully half of all HNW investors (51%) report that the issues which are important to them affect their investment decisions; this is slightly higher among millionaires (55%). There is generational aspect to this practice: 58% of HNW investors age report that issues of personal importance impact investment decisions, a figure which drops to 48% among those and tumbles to 38% among those 65+. It may be that the oldest investors, often into retirement, are focused more on guaranteeing income from their investments than taking chances on investing in newer and often more uncertain returns from industries focused on social justice, poverty or financial inclusion Although the topic of social justice was not phrased to reflect race relations within a community, it should be noted that the majority of fieldwork was completed before the Michael Brown/Ferguson MO grand jury verdict announcement. All fieldwork was completed before the Eric Garner/New York City grand jury verdict announcement. 8

9 Leading Investments for 2015: Equities Seen as Better than Fixed Income Among HNW investors, the investment (of 14) viewed most favorably for 2015 is dividendbearing stocks, cited by 57% as a good prospect. Second is S&P 500 Index funds (51%), followed by mutual or exchange traded funds (49%), Dow Jones Average Index funds (46%) and a cash position (43%). Good Investment Prospects in 2015 Dividend bearing stocks S&P 500 Index funds Various forms of bonds as well as non-dividend bearing stocks are among the investment products deemed to have the lowest good investment potential for HNW investors overall and millionaires are of a similar mind regarding the prospects for the nine of the 14 investment vehicles. For two of the remaining investments, millionaires are more positive: dividend bearing stocks are seen as a good prospect by 65% of millionaires and 57% of all HNW investors while international stocks are viewed positively by 35% of millionaires and 28% of all HNW investors. The opposite is true for gold, commodities/precious metals other than gold, and annuities: 36% of all investors view gold as a good investment for 2015 compared to 22% of millionaires; 31% of all HNW investors view commodities/precious metals other than gold as a good investment for 2015 compared to 22% of millionaires; and 35% of all investors view annuities as a good investment compared to 22% of millionaires. Mutual or exchange traded funds Dow Jones Average Index funds Cash position Bottom Investment Good Prospects Neutral Bad in 2015 Munis in your state Bonds International stocks of non US-based companies Bond funds Non-dividend bearing stocks Good Neutral Bad 9

10 Investment Sectors Technology Is Seen as Top Sector for 2015 In the view of HNW investors, the top investment sector for the coming year is Technology (cited as good by 87%), followed by Bio-tech (75%), Pharma (71%), Energy (69%) and Healthcare (65%). Communications (62%), Natural Resources (54%) and Real Estate (51%) are in a second tier. Top Investment Sectors in 2015 Technology Similar percentages of HNW investors overall and millionaires view nearly all of the 18 sectors as good. Only the Housing sector is seen much more positively by all investors (46%) than by millionaires (32%); directionally similar but weaker differences are seen for the real estate and natural resources sectors. Bio-tech Pharmaceutical Energy Healthcare Bottom Investment Sectors in Good Neutral Bad Tourism Entertainment Insurance Aerospace At the bottom of the list of investment sectors for 2015 are the consumer discretionary and aerospace sectors. While a substantial 47% regard the Aerospace sector as neutral territory for investment, just 29% see it as good and 21% see it as bad. Consumer discretionary Good Neutral Bad 10

11 US Seen as Top Investment; Russia and Middle East as Bad Investments The United States is the only country that a majority of HNW investors regard as a good investment for At 74%, this is fully 32 percentage points higher than the next country, Japan (42%). Following the US and Japan are India, China, and Western Europe (40%, 38% and 36%, respectively). Brazil, post-world Cup and pre-olympics, trails in sixth place (33%). A neutral investment outlook is more prevalent than a positive outlook for Western Europe and Brazil. The United States stands alone as the only country a majority of HNW investors regard as a good investment for the coming year. Russia, Ukraine and the Middle East hotbeds of conflict are cited as good investments by only 4%, 3% and 4% of HNW investors, respectively. Fully three in four see these areas as bad investments; millionaires (85%) are more negative toward Russia than all HNW investors (75%). The United States Clearly, HNW investors view conflict negatively. This is reflected in their outlook for investment in Russia, Ukraine and the Middle East, and as noted earlier, foreign conflicts are the number one concern of HNW investors regarding their financial situation. Asked directly about the topic, fully 90% of HNW investors are at least somewhat concerned about international investing due to ongoing foreign conflicts; 56% are very concerned about international investing However, comparatively few HNW investors report converting concern into action. Of those with international investments, just 21% say they have changed their investment strategy due to ongoing foreign conflicts. Japan India China Western Europe Brazil Other Asian countries Other Eastern European Countries (not Russia or Ukraine) Other South American Countries 2015 Investment Outlook by country/region (%) Russia The Middle East Ukraine Good Neutral Bad 4 11

12 Investment Considerations and Portfolios Stocks or Equities Trump Cash, Fixed Income Investments Thinking specifically about personal investment allocations for 2015, stocks or equities are expected to comprise the biggest part of HNW investors portfolios (44%). About equal proportions of the portfolios will be in cash (21%), fixed income vehicles (18%) and other investments (17%). Compared with HNW investors as a whole, millionaires are even more likely to say their portfolios will be in stocks or equities (49%). But they are less likely to say they will keep their money in cash or other miscellaneous investments on the market. Planned Portfolio Allocation for 2015 Stocks or equities, stock funds, ETFs 44% Cash 21% Fixed income: bonds, treasuries, CDs, etc. 18% All other investments 17% 12

13 Looking Forward: Future Investment Actions on Key Issues When presented with ten investment actions related to those issues of personal importance, 41% of HNW investors envision investing in clean energy funds in the next 3 years, the number one option. Nearly as many, 40%, anticipate investing in healthcare-based funds; healthy living is the issue of greatest importance to investors. At least one in three HNW investors expect to utilize positive screening (38%), negative screening (36%), investing in funds which focus on positive social/environmental change (35%) and community investing (33%) in the next 3 years. About one in four or fewer say they might in the next 3 years invest in waterbased conservation funds, poverty/financial inclusion funds, divest of fossil fuel holdings or invest in climate change funds. Focusing further on water issues, beyond the 27% who anticipate investing in waterbased conservation funds in the next 3 years, just 16% of HNW investors say they plan to add any investments that include water infrastructure or water treatment in the course of the next three years. Potential Investment Actions in Next 3 Years Investing in clean energy funds Investing in healthcare-based funds Positive screening actively investing in businesses demonstrating sustainable practices Negative screening screening out sectors you object to on ethical grounds Investing in funds that focus broadly on creating positive social or environmental change Community investing Investing in water-based conservation funds Investing in poverty/financial inclusion funds Divesting from fossil fuels Investing in climate change funds None of these Household assets do not impact the likelihood of engaging in these potential investment actions. However, there is generational aspect to several of these actions. For example, 42% of HNW investors age might use positive screening in the next 3 years, a figure which drops to 36% among those and 31% among those 65+. Likewise, 41% of HNW investors age might use negative screening in the next 3 years, compared to 31% among both those ages or 65+. Four in ten investors age (40%) are considering investing in funds which focus on positive social/environmental change in the next 3 years, falling to 32% among those and 25% among those 65+. Finally, 37% of those age might potentially pursue community investing, a figure which falls to 31% among those age and to 26% among those age 65 or older. 13

14 Investment in the Energy Sector A Sector On the Move Although the adage is that money makes the world go around, the same could be said for energy. The government and private entities regularly report on the current cost of and anticipated changes in the price of oil, natural gas and electricity. And with increasing efforts to generate interest (and profits) from solar and wind power, if follows that the Energy sector is ranked fourth among 18 sectors for being a good investment prospect for Additionally, energy is one of these issues on which HNW investors anticipate taking action in the next three years. Focusing specifically on the prospects for various types of energy investments in 2015, the top four (of 10) are a mix of traditional an alternative energies: natural gas (76%), solar (61%), petroleum-based such as oil and gasoline (53%) and wind (52%). About half have a positive outlook toward geothermal (51%) and battery-powered electic vehicles (48%). At the bottom of the list is coal, with less than half as many saying it is a good investment (21%) as a bad investment for 2015 (46%). Continued negative publicity about the potential risks of nuclear energy over the years is likely keeping expectations lower for investing in this type of energy (29%). Prospects for Energy Investments in 2015 Natural gas Solar Petroleum-based energies Wind Geothermal 51 Currently,on average, investors Battery-powered electric vehicles 48 estimate that 15% of their portfolio is currently allocated toward the energy sector. Biofuel such as ethanol State or municipal energy suppliers Nuclear Coal Good Neutral Bad 4 14

15 Considerations and Interest in Investing in Energy Sources Performance and policy factors affect HNW investors approach to energy investments. Their top consideration is the bottom line (91% cite the rate of return), followed by past history (87% want to see a track record of success and growth) and diversification (76%). Not far behind, however, are energy independence (72%)and environmental impact 67%. Energy independence, an issue of significant concern when gasoline and home heating oil prices per gallon increase or remain stubbornly high in the eyes of consumers, is a factor in the decision for 72% of HNW investors. Two in three report that environmental impact is a factor (67%), while about six in ten agree that they consider liquidity (62%) and government regulations (59%). Rounding out the list of decision elements are government incentives and social impact (both 51%), and carbon footprint (45%). Factors in Decision to Invest in Energy Sector Rate of return, investment performance Track record of success, growth Diversification Energy independence Environmental impact Liquidity Government regulations Government incentives Social impact Carbon intensity/carbon footprint - amount of carbon produced by energy used Although it ranked eighth of eleven issues, fully 77% of HNW investors report that clean energy is an issue of personal importance. And as solar, wind and geothermal are each seen as good investment prospects in 2015 by at least half of investors, it makes sense that 65% express interest in investing in clean energy sources. But converting interest into action may prove difficult. When probed on the possibility of investing in home installation of a sustainable energy system, only 'Smart' home products designed to save energy, such as next generation thermostats or Energy Star rated appliances, are cited by at least half of HNW investors. For clean energy systems themselves, which typically require significant financial outlays or advanced planning, next year investment plans drop to 18% for solar panels, 9% for a geothermal system and 8% for wind power. 15

16 Energy Knowledge and Options: National and Personal HNW Investors See a Place for Traditional Energy in Portfolio and National Policy HNW Investors behavior and outlook on the energy sector are informed by high awareness of energy issues. Most HNW investors, 84%, self-report that they have at least some knowledge of US energy issues and problems; 31% say they have a lot of knowledge of this topic. Turning to US policy to address the nation s energy challenges, fully 88% agree or that the U.S. should invest in technology and programs designed to increase energy efficiency. When asked for the preference, 58% of HNW investors favor expanding production of alternative energies (wind, solar, biomass) for this purpose, twice as many as prefer to expand production of traditional energies such as oil, gas, coal (29%). Considerably more HNW investor women (65%) than men (52%) would opt to expand production of alternative energies; more men (15%) than women (8%) suggest expanding both alternative and traditional energies equally. Support for expanding alternative energies is higher among those under age 65 (60%) than those 65 or older (51%); more than a third of those in the oldest age group prefer expancing production of traditional energies. Favored Approach to Addressing US Energy Challenges Expand production of alternative energies, such as wind, solar, and biomass Expand production of traditional energies, such as oil, gas, and coal Both equally Neither/other Opinion of Recent Energy Issues Among the many energy topics which have faced policymakers and HNW investors over the last few years, four take center stage in this survey. In line with preferred methods for expanding energy production, support is stronger for the two solutions which focus on alternative energies than for the two solutions which focus on traditional energies. Fully 80% of HNW investors support the expansion of solar farms and the same percentage support the expansion of wind farms. By comparison, 68% support efforts to develop the Keystone Oil Pipeline System between the US and Canada, while just over half support hydraulic fracturing (fracking) of shale deposits to develop oil and gas resources. Also in line with the preferred methods for expanding energy production, support is stronger for the two solutions which focus on alternative energies among women than men, while more men than women support the two solutions which focus on traditional energies. 16

17 Societal and Investment Impact of Climate Change Climate Change Seen as Impacting the Planet; Humans Are a Factor For many of today s HNW investor s, climate change is real. Two in three (65%) say that climate change is having at least some impact on Earth, with 39% reporting that climate change is having a lot of impact on the planet. Furthermore, many investors place the blame of human activity: 71% say humans are having at least some impact on climate change. In both scenarios, HNW investor women are more critical than HNW investor men: 45% of women and 34% of men say climate change is having a lot of impact on the planet, while 54% of women and 44% of men say humans are having a lot of impact on climate change. 65% 71% Despite these sentiments about climate change, markedly fewer HNW investors 30% report that climate change is having some impact on the value of their investments/portfolio. 17

18 HNW Investors Planning to Take Small Steps Toward More Sustainability In light of their sentiments about climate change, it is of little surprise that 96% of HNW investors plan to take at least one sustainable behavior in the next three years. The top goal is to become better at turning off lights when leaving a room, cited by 67%. At least six in ten hope to install more energy saving light bulbs (64%), conserve water (63%), recycle more (62%) and turn down the thermostat in the winter / turn up the thermostat in the summer to save energy (61%). It should be noted that these are generally small steps which require relatively little expense to perform. When significant costs or a major change in behavior is required, the likelihood to engage in the behavior in the next three years falls considerably. Examples of these more expensive behaviors are replacing appliances with high-efficiency models (50%), purchasing a more fuel-efficient vehicle (38%), installing better insulation in the home (32%) and buying smart products which use less energy (20%). Confirming an earlier finding, just 6% anticipate installing solar panels in the near future. Age is a factor in engagement in several sustainable behaviors. HNW investors under the age of 54 are more likely than those age 65 or older to say they plan to become better at turning off lights when leaving a room (73% vs. 63%), opt for paperless billing (61% vs. 43%), purchasing a more fuel-efficient vehicle (43% vs. 28%) and commuting sustainably (40% vs. 24%). Engagement in Sustainable Behaviors in Next 3 Years Being better at turning off lights when leaving room Replacing traditional bulbs with energy saving bulbs Conserving water Recycling more Turn down thermostat in winter/up in summer Opting for paperless billing/statements Replacing old appliances with high-efficiency models Purchasing a more fuel-efficient vehicle Commuting sustainably (carpooling, public transportation) Installing better insulation in the home Reducing energy use by buying smart products Installing solar panels None

19 Use of Financial Professionals HNW Investors Receptive to Financial Expertise on a Host of Topics Seven in ten HNW investors in the U.S. (71%) leverage the insight of a financial professional. Among all HNW investors, CFPs (22%) and financial advisors (21%) are the most commonly used professionals. No more than one in ten HNW investors uses a CPA (10%), stock broker (9%), CFA (7%), or a lawyer (3%) as their primary investment advisor. HNW investors are open to employing financial professionals in myriad ways. Of 11 possible types of assistance a financial advisor could provide, three in four HNW investors or more report being interested in eight of them. Guidance regarding federal tax policy and clear communications on how assets contribute to a retirement income stream are at the top of the list (both mentioned by 89%). Of nearly as much interest is advisor guidance on asset allocation (88%). Though of lower relative interest, at least three in four HNW investors want new investment ideas from their advisor (86%), an analysis of the markets and their impact on the portfolio (86%), downside portfolio protection (84%), assistance sticking with a financial plan (81%), guidance on not depleting assets due to elder care or long term care expenses (79%), guidance on estate planning to minimize tax effect on assets passed to heirs (78%) and help creating a comprehensive financial plan (66%). Desired Help from Financial Advisors (Among those with an FA) Guidance and acting as resource on changes in federal tax policy and exemptions Clearly communicating how assets can contribute to a retirement income stream Providing guidance on your portfolio s asset allocation Bringing new investment ideas to you Analyzing what is going on in the economy and markets and how it impacts your portfolio Providing downside protection in your portfolio Helping you stick to your financial plan Guidance on not depleting your assets due to elder care or long term care costs Guidance on estate planning to minimize tax effect on assets passed to heirs Comprehensive financial plan including budgeting, expenditures, and investments Taking advantage of investment opportunities in foreign markets

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21 Methods The Morgan Stanley Investor Pulse Poll was conducted via telephone interviews from October 14 through December 2, 2014 by GfK Public Affairs & Corporate Communications. Approximately one thousand (1,008) respondents across the United States were contacted using listed sample of landline phone numbers pre-identified as high net worth households ($100,000 or more in liquid investable assets). Respondents were required to be between the ages of 25 and 75 years old and to be one of the primary decision makers in the household for financial decisions. In addition, confirmation of $100K or more in household net investable assets was included. Quotas were applied in order to obtain approximately onethird in each of the following categories: $100K to $499K, $500K to $999K, and $1 million or more in investable assets. Results were then weighted to age within each of these three asset classes using the Federal Government s Survey of Consumer Finances data. Regional oversamples of approximately 300 respondents were also obtained in each of 8 regions across the country. These regional samples required the same screening criteria as the national sample, except that respondents had to live in the metro areas of San Francisco, Los Angeles, Denver, Chicago, Boston, New York, Atlanta, or Houston. For New York, one-third of the 300 respondents were targeted to be from the New York, New Jersey, and Connecticut areas. The regional oversamples were weighted using the same targets from the Survey of Consumer Finances as was the national study. 21

22 Contacts Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. Morgan Stanley Wealth Management, provides access to products and services to individuals, businesses and institutions, including brokerage and investment advisory services, financial and wealth planning, credit and lending, cash management, annuities and insurance, retirement and trust services. The Firm's employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 43 countries. For further information about Morgan Stanley, please visit Corporate Communications Mr. James Wiggins Managing Director Corporate Communications Morgan Stanley (914) James.Wiggins@MorganStanley.com Ms. Christine Jockle Executive Director Corporate Communications Morgan Stanley (914) Christine.Jockle@MorganStanley.com Marketing Research Dr. George Szybillo Executive Director Marketing Research Morgan Stanley (914) George.Szybillo@MorganStanley.com Mr. Anthony Guglielmucci Vice President Marketing Research Morgan Stanley (914) Anthony.Guglielmucci@MorganStanley.com GfK is one of the world s largest research companies, with more than 13,000 experts working to discover new insights into the way people live, think and shop, in over 100 markets, every day. GfK is constantly innovating and using the latest technologies and the smartest methodologies to give its clients the clearest understanding of the most important people in the world: their customers. In 2012, GfK s sales amounted to EUR 1.1 billion. To find out more, visit or follow GfK on Twitter: This project was conducted for Morgan Stanley by the GfK Public Affairs & Corporate Communications team. For more information about GfK, please contact Mark.Keida@gfk.com. 22