Even before the events surrounding the U.S. debt ceiling deal and downgrade, affluent investors' concerns about how long their retirement assets will last was rising, according to a Bank of America Merrill Lynch survey conducted in June.
Of the 1,000 individuals with more than $250,000 of investable assets that participated in the semiannual survey, 66% said they are more concerned about their retirement assets lasting through their life, an increase from 57% in January, while 54% now worry they cannot afford the retirement lifestyle they want, up from 46% at the beginning of the year.
In June, the survey participants cited concern about political and economic events, as 81% said the national debt contributed to fears tied to the longevity of their retirement assets.
Other issues topping the list included coming presidential primary and general elections that concerned 67% of respondents; rising commodity prices, 63%; inflation, 57%; real estate market, 53%; the economy's effect on the ability to meet financial goals, 53%; unemployment rates, 46%; and rising interest rates, 38%.
Polling for the Merrill Lynch Affluent Insights survey was conducted by the marketing and public opinion research firm Braun Research Inc. from June 7 through June 21. The survey included affluent Americans in all age categories. The results were released Monday. The study is the latest public update from Merrill Lynch, which has aggressively worked behind the scenes to update its financial advisors in real time as market conditions have become more opaque in recent weeks, said David Tyrie, head of personal retirement solutions at Bank of America Merrill Lynch.
June's survey results point to climbing cross-generational concerns from rising college tuition costs to health care costs past retirement. Those concerns, in turn, are affecting how clients choose and work with financial advisors. "It's a group that is very, very focused on what's happening in the marketplace, what's happening within their own portfolios and what's happening within their own families," Tyrie said of the affluent investor set. "That's what really jumped off the page to me with this study."
Affluent parents surveyed said they are talking to their children about money sooner, with 57% starting before their children are 12, and 85% before they reach 18. Mothers, in particular, took a more active role in those discussions, with 64% of mothers versus 46% of fathers initiating talks with children under 12. Before the age of 18, 90% of mothers began talking about money with children, versus 76% of fathers.
Those talks with children may be influenced by the parents' own regrets. Forty-six percent of respondents indicated they regret the financial decisions they made as newlyweds. That included 20% who wished they had saved more for retirement, 18% who feel they should have saved more for a retirement fund, 15% who indicated they should have budgeted more and 10% who wish they had paid off more debt.
Of parents working with a financial advisor, 64% said they have shared some form of that advice with their children, which Tyrie said he took as a good sign.
"I'd love to see this whole notion of parents and financial advisors teaming up to help the next generation, and that's what we're really focused on here," Tyrie said. "I think that is the right solution for America, really."
More parents said they plan to shift the responsibility to pay for education to their children, with 47% indicating they have not or will not pay for all of college.
Paying for the rising cost of health care is also weighing heavily on the minds of affluent Americans, the survey showed, with 70% rating it as a top concern, including caring for aging parents and providing them with financial assistance. Just 47% of survey respondents 65 and older were able to correctly identify costs that Medicare Part A covers.
When choosing a financial advisor, 49% said they interview two or more advisors before making a final selection, while 38% said they talk to three or more. Factors that contribute to making that choice include a financial advisor who gets to know their needs, with 60%; followed by accessibility, 49%; a good personality, 47%; variety of investment and banking solutions; 46%; solid track record, 43%; and experience with similar clients, 42%.
