BofA's Krawcheck Unveils Merrill's Affluent Investor Survey

Retirement is an area of fairly widespread worry: “70% don’t think their retirement plan thoroughly takes into account the potential for unexpected events,” according to Lyle LaMothe, head of U.S. Wealth Management for Merrill Lynch Wealth Management.

Perhaps the most surprising statistic in the survey results was that nearly twice as many affluent investors said teaching their children “financial know-how” was a higher priority than teaching them about “choosing the right spouse/partner.” Here, 51% opted for “financial know-how,” and only 26% said “choosing the right spouse/partner,” was most important, according to the survey. Only “maintaining a close relationship with family” (54%), topped “financial know-how.”

Surprise: A Risk-Averse Younger Generation

Another surprising result of the survey was risk tolerance or aversion indicated by different age categories of investor. While you might expect that the older investors get, the more conservative they would be about investing, Krawcheck pointed out that the majority (52%) of “younger investors, 18 to 34, with a mean of 30,” described themselves as conservative, meaning risk-averse and looking at very conservative investments. She noted that “first and last impressions count,” and that these investors saw the Internet bubble burst and now see the ongoing market and economic turmoil. They are the second most conservative category, while only 45% of those in the group of 35- to 50-year-olds described themselves as conservative when it comes to risk. The most conservative are those 65 and older, with 55% saying that they are risk averse. Overall, 50% of those surveyed said they had a “low tolerance for risk.”

Comments? Please send them to [email protected]. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.