NEW YORK (Reuters) - Wealthy U.S. investors feel better about their financial matters than they did a year ago, yet Americans also say they also expect to work much longer than they had once hoped, brokerage giant Merrill Lynch said, citing its latest investor survey.
Some 41 percent of Americans with at least $250,000 of investable assets say their finances are in better shape than last year, with 37 percent reporting no change. Three out of four of the 1,000 people surveyed said they were confident their finances would improve in the coming year.
Yet 61 percent now expect to retire later than planned, doubling from 29 percent in January, with respondents divided over their outlook for the U.S. economy for the next year, Bank of America’s Merrill found in its quarterly survey.
“They are more optimistic about themselves than they are about the economy,” Sallie Krawcheck, president of Bank of America’s wealth and investment management division, said in a conference call with reporters.
Among other findings, Merrill said one in five of the wealthy Americans surveyed said they had tapped into their nest egg to meet short-term expenses or compensate for lost income in the family. A number of respondents said they had used long-term savings to pay down debt.
“They feel as if their financial picture has stabilized,” Lyle LaMothe, head of U.S. wealth management at Merrill, told Reuters. “The economy appears to be stabilizing, and markets are healthier. More importantly they have realigned their expectations to be more realistic.”
Among respondents discussing their cash management plans, a third are putting money in interest-bearing accounts, while nearly one in four expect to invest in markets. Nearly half said that now that they have whittled down their debt, they remain leery of using credit out outside of an emergency.
Caution and conservatism also resulted in investors pouring money into deposit accounts. BofA last week reported $244 billion of client deposits across Merrill, US Trust and its retirement business.
The wealth management division by itself would rank among the top ten U.S. depository institutions. In the past year, the division increased deposits by more than $20 billion, the equivalent, Krawcheck said, of a City National Corp.
It is not only the Baby Boomers nearing retirement age who are worried: Respondents 18 to 34 are even more anxious about their finances.
The survey found that the “young affluent” are more concerned than their elders about outlasting their money or maintaining their lifestyle in retirement. This group also is more conservative about their investments.
Krawcheck said Merrill was working to develop new strategies that help clients realize gains while also protecting against loss. Solutions range from diversified portfolios, to “structured products” and option strategies, she said.
“We as an industry spend billions to gain relative investment performance, skewed to capturing the upside,” Krawcheck said. “Yet clients tell us, ‘Keep me safe.’ We need to align our resources to what our clients want.”
Reporting by Joseph A. Giannone, editing by Dave Zimmerman and Lisa Von Ahn
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