Vast majority believe they are better preapred to cope with economic uncertainty.
Almost half of affluent Americans view the country’s economic uncertainty as the “new normal” rather than “a passing period of heightened volatility,” according to a recent Merrill Lynch Affluent Insights Survey.
The poll of 1,000 Americans with $250,000 or more in investible assets finds ongoing uncertainty mixed with cautious optimism for the coming year. More than half (54 percent) said they are worried about the impact of the economy on their ability to achieve their financial goals, while half are concerned about the unemployment rate.
But 58 percent said they feel a greater sense of stability in their financial lives than they did a year ago, and the vast majority (94 percent) of whose who believe we are in a "new normal" also believe they are better prepared to cope with economic uncertainty.
With an economic recovery that Federal Reserve Chairman Ben Bernanke recently termed is “close to faltering,” affluent families are trying to take control of their financial lives. One-third of respondents feel they have done so over the past year, while half said they have implemented changes in their daily lives, including sticking to a budget (32 percent), making more joint investment decisions (29 percent) and setting tangible goals for the future (28 percent). One-third said they are living more within their means.
Anticipating their financial situation for 2013, 35 percent believe it will improve, while 41 percent expect it to remain the same. Characteristically, more men than women (43 percent vs. 28 percent) believe their financial situation will improve next year, while, among all age groups, Millennials have the most positive outlook about their financial situation.
Among those who do not believe their financial situation will improve, nearly two-thirds (61 percent) cite ongoing market volatility as the barrier to achieving their financial goals. More women than men (68 percent vs. 54 percent) are prone to think this.
Interestingly, the survey finds a less conservative risk tolerance. Thirty percent described themselves as conservative investors, down from 36 percent in 2011 and 50 percent in 2010. This shift is more prevalent among those under the age of 50. Today, the survey found, 23 percent of Millennials describe themselves as conservative compared to 52 percent two years ago.
What qualities do affluent Americans prize most in a financial advisor? Two-thirds said working one who understands their risk tolerance and helps them plan around it, while 60 percent said they most prized an advisor who is backed by a reputable firm they trust. Just over half (53 percent) said it was most important that their advisor understand and respects how they wish to communicate.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.