Survey of Affluent Individuals Finds Heightened Financial Concerns, Sensitivities to Risk, and Need for More Comprehensive Advice
Survey of Affluent Individuals Finds Heightened Financial Concerns, Sensitivities to Risk, and Need for More Comprehensive Advice
July 30, 2010 — Many affluent families are facing circumstances that create additional strain on the household, according to the latest Merrill Lynch "Affluent Insights Quarterly" study, which analyzes the values, financial priorities and concerns of affluent Americans. The sample of participants was a nationally representative sample of 1,000 affluent Americans with investable assets in excess of $250,000.
According to the report, 52% of affluent individuals surveyed cited one or more family-related financial responsibilities keeping them up at night. Among this group:
42% are losing sleep over whether they can maintain their family's standard of living
40% are losing sleep over family health-care costs
37% are losing sleep over saving and investing for retirement
33% are losing sleep over daily and monthly family expenses.
Compounding the financial strain is that 36% indicate having additional responsibilities within their family, such as supporting at least one parent or elderly relative (45%), an adult-age child (36%) or grandchildren (16%). When asked why they are supporting their adult-age children, 40% indicated doing so because their child is still in school, 28% are trying to help maintain their child's standard of living, 27% are helping pay their child's significant debt (e.g., college, credit cards), and 21% are helping to support a child who was unable to secure employment post-graduation.
According to the survey, the number of affluent Americans concerned about health care costs, funding retirement and the impact of the economy on their ability to meet their financial goals has increased since the beginning of 2010. Health care costs continue to be the No. 1 financial concern overall (65%), followed by retirement assets lasting throughout their lifetime (62%) and being able to live the lifestyle they want to in retirement (53%). Regarding their children, 41% of affluent parents worry about the rising cost of college education, while many have also expressed growing concerns throughout the year about their ability to preserve an inheritance for their children (46%).
Facing such a wide range of financial concerns and challenges, affluent Americans increasingly expect to delay retirement, with 45% expecting to retire later than they had originally planned, compared to 31% one quarter ago and 29% in January 2010.
Adding to the complexity within families is that 51% of affluent couples disagree with one another about one or more financial matters including:
Sticking to the family budget (45%)
Purchasing luxury items (e.g., cars, boats, second homes) (33%)
How to properly manage credit cards or pay off debt (28%)
Making investment decisions (20%)
How to best save and invest for retirement (19%)
Whether to send their children to private or public school (15%).
"The role of a financial adviser has evolved during the last couple of decades from one of only providing investment advice to being an orchestrator of solutions that address every aspect of our often complex financial lives," said Lyle LaMothe, head of U.S. wealth management for Merrill Lynch Wealth Management. "These days, many individuals and couples are seeking relationships with advisers who understand how their personal and family values factor into their investment strategies as well as those who can offer advice that may span multiple generations."
Many parents are taking advantage of their relationship with a financial adviser to better educate their children on financial matters. Among parents who work with an adviser, 74% have shared with their children some form of advice received from their adviser. Such advice includes the importance of managing budget (42%), investing for retirement at an early stage in life (32%), managing a checking/savings account (30%), and knowing how to properly pay down and manage debt (25%).
Print this Page