Harvesting The Gold From Investors In Their Golden Years
Thursday, April 03, 2008SUSIE GHARIB: Conventional wisdom used to be that when you retired, you switched your investment priority to capital preservation. But now many retirees are still accumulating wealth and for many that includes active stock trading. As Jeff Yastine reports, Wall Street is finding new ways to market products to seniors encouraging them to give trading a try.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Meet Larry Klima.
LARRY KLIMA, STOCK TRADER: It is more of a job I think.
YASTINE: And his wife Doreen.
DOREEN KLIMA, TRADER: It is not my vocation, it's my hobby.
YASTINE: They sit in opposite rooms of their condo, doing the same thing, buying and selling positions in stock portfolios and often hedging those buys with options strategies as well. They are in many ways, a stock brokerage's example of an ideal set of customers. They're retired, have sizable assets and the time to devote to trading. Larry has been trading for years, but he says these days, with fixed-income securities yielding such low returns, he and Doreen feel compelled to trade and try to compound their wealth in the stock and options markets.
L. KLIMA: We were talking about a yield on a two-year Treasury in the 2 percent range or a 10-year Treasury at 3 1/2, 3.60, whatever. And we want to preserve our portfolio and live on it and we contribute to 529 trusts for our grandchildren. But we want to get a return on our money.
YASTINE: That is creating opportunities for Wall Street brokerages, marketing their trading software and services to the nation's burgeoning community of retirees and seniors. At events like this in Boca Raton, you're likely to find seasoned traders like the Klimas and others who are learning for the first time. Joseph Vietri, vice president of investor business development at Charles Schwab, says seniors are a key demographic for the brokerage house.
JOSEPH VIETRI, VP, ACTIVE TRADING & INVESTING SVCS, SCHWAB INVESTOR SRVCS:. These people have a lot of time on their hands. We're dealing with a client set who is -- a lot of these folks were successful business people, entrepreneurs. And they've migrated out of the business world and they want to stay sharp. They want to utilize that time. So we see more people, instead of taking vacations and being leisurely, just focusing on their investment portfolios and taking a more active approach.
YASTINE: But there is a downside. Don Blandin of Investors Protection Trust says time is working against retirees, should they trade and lose a substantial sum of money.
DON BLANDIN, PRESIDENT & CEO, INVESTOR PROTECTION TRUST: The mistakes that they may have made in learning about investing early on, they can no longer make those kinds of mistakes because they don't have the time to recoup. So they're going to have to be much more cautious with their trading and the idea of a whole bunch of baby boomers becoming day traders as a game, makes me worry and I think puts a lot of people at risk.
D. KLIMA: We're not real big risk takers.
YASTINE: There's another growing demographic among traders: older women, like Doreen Klima.
D. KLIMA: I think the woman coming up has been in the workplace, had had our own money, have made a lot of her own decisions. And of course she's better with the computer. I think she'll be out there wanting to enhance her position and not depend on her mate for her retirement.
YASTINE: While they're not depending on the market to fund their retirement, the Klimas hope new trading strategies help them grow their nest egg, while Wall Street hopes new generations of retirees do the same. Jeff Yastine, NIGHTLY BUSINESS REPORT, Boca Raton.
