Are Investments Keeping Pace?

Senior corporate executives, including financial managers, are one of the economic segments under the most stress these days, despite generally high compensation. Many are juggling issues like early retirement or the failing health of parents, as well as paying for children's college costs. But unlike much of the general population, or younger workers, the biggest issue facing senior managers during the economic malaise has been depreciation of existing assets, not their ability to accumulate, says Walt Zultowski, senior vice president of research for Phoenix Asset Management in Hartford, Conn.

While an awful lot of high-tech investments have soured, Zultowski says he doesn't get the impression that executives are upset with themselves -- though "there is some sense that some people got a little risky" with their portfolios in the past few years. Not surprisingly, he says, "Probably the worst impact has been on people in their 30s and 40s in a high-tech orientation, who've been decimated in the past year."

Those troubles are presumably being reflected in the annual survey from Matthew Greenwald & Associates. Released in May, the survey found that as a result of the stock market slump, the number of workers who expect to live comfortably in retirement fell to 63 percent from 72 percent a year earlier. Similarly, a survey by Silicon Valley-based accounting firm Mohler, Nixon & Williams found that 401(k) participation rates had dropped in the first quarter for some 200 Northern California companies because employees were discouraged by investment results.

Somewhat contradictory findings came from The Principal Financial Well-Being [Index.sup.sm] which suggests that retirement investors remain composed and are investing for the long term. The insurance firm's index found that fully 86 percent of small and mid-sized company employees with retirement savings reported they would not move their retirement investments from volatile to more stable investments as a result of the slumping market. Have too many executives been too complacent about their retirement funds? Zultowski isn't sure, but says, "I think that the more accurate view is that they are exposed to more information than ever before, but not all of that is necessarily absorbed. They never have enough time to turn that into knowledge. I wonder sometimes if having all this information gives some people a false sense of security."