By Suzanne Woolley
The topic of artificial intelligence is likely to crop up when financial professionals gather with their friends or families for July 4 cookouts, if the latest Markets Live Pulse survey is any indication.
About 40% of the professional investors anticipate AI will come up over burgers and beer on the US holiday; 30% of retail investors agree. While the most visible impact of AI is the flood of money into tech stocks, the technology is also mentioned as something that could disrupt the wealth management world.
Clients often bring up AI in conversations about money, according to financial planner Kassi Fetters of Artica Financial Services in Anchorage, Alaska. “The name of the game now is being okay in a constant state of adaptation, learning and change,” she said, adding that younger investors “view AI as another tool, instead of an enemy.”
The risk of recession also emerged as a possible theme to hear about at July 4 festivities or similar gatherings elsewhere in the world, according to the MLIV Pulse survey with 593 respondents globally. At the same time, though — in what could be wishful thinking — 48% of retail investors and 39% of professionals said they will absolutely avoid any conversation about finances at the next family get-together.
The drumbeat of job cuts in the financial industry may help explain why a greater percentage of professional investors than retail investors said they are boosting savings. Some 54% of pros expect to save more this year than they did in 2022, compared with 43% for those respondents who don’t work in finance.
The survey finds professional and retail investors somewhat in sync in their approach to savings. Almost a third of both groups said their strategy is best described by the statement, “I’m putting most of my money in ‘safe’ assets like savings accounts, CDs and money market funds.”
Investors have already parked a lot of cash in money market funds. Assets stood at $5.4 trillion as of June 28, according to the Investment Company Institute, compared with $4.5 trillion at the same point in 2022.
60/40 approach
The most popular approach to saving was a sort of a 60/40 portfolio, splitting money between safe assets and risky assets like stocks and alternatives, the choice of 48% of professional investors and 53% of retail investors.
Investors expecting investment portfolios (including savings) to outpace inflation this year made up 56% of the pros and 58% of retail investors, with hopes high for real, inflation-adjusted returns from stock holdings in particular.
At the moment, predicting that a stock portfolio will beat inflation this year doesn’t seem very controversial — as long as that portfolio was in the S&P 500 or the narrow handful of stocks fueling its rise for most of this year, such as Nvidia Corp., which makes chips needed to power a new generation of AI products. If portfolios were invested in the S&P 500 at the start of the year, investors had seen a gain of about 16%.
Among write-in comments, gold and profits on options trading got multiple nods.
One survey-taker went down a very different path, however, in their answer: The return from “contentment,” they wrote, would outpace inflation.
With inflation still high, and the outlook for financial markets highly uncertain, one way some pros anticipate getting a return that beats the rate of inflation is through their pay — 21% said that, compared with 10% of retail investors. To prepare for any coming recession, however, 50% of all investors surveyed said they are culling everyday spending.
Not everyone is taking a defensive stance. Some survey respondents wrote in that they are “waiting in Treasuries to move on distressed real estate” or keeping a “stash of cash to deploy opportunistically.”
While almost all of the write-in comments about steps being taken in anticipation of recession had to do with something financial, one respondent focused on the personal — “trying to focus more on mental health and mental resiliency.” And AI will undoubtedly be used to create an app to help with that.
The MLIV Pulse survey of Bloomberg News readers on the terminal and online is conducted weekly by Bloomberg’s Markets Live team, which also runs the MLIV Blog. This week, the survey focuses on quarterly earnings. Do you think the impact from AI on the tech profits is overblown? Share your views here.
More stories like this are available on bloomberg.com.
