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Affluent Are Diligent When Picking Advisor, Merrill Survey Finds

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Nearly half (49%) of affluent Americans interviewed two or more financial advisors before choosing the one that was right for them, with 38% interviewing three or more advisors, according to the latest Merrill Lynch Affluent Insights Survey.

The survey of about 1,000 individuals with $250,000 or more in investable assets also found that rising college expenses, significant health-care costs and the need for retirement income top the list of financial concerns.

sallie krawcheck“Our latest survey finds that younger adults are far more concerned about their financial futures than older Americans,” said Sallie Krawcheck (left), president, Global Wealth & Investment Management, Bank of America, in a statement. “This puts a spotlight on a need to meet this next generation on their terms and with a heightened sensitivity to a changed economic and financial landscape.”

The survey also found that, compared to a generation ago, more parents today begin speaking with children about money before the age of 12: Just 42% of parents over the age of 65 spoke with their children about financial matters at such a young age, compared to 76% of parents today ages 35 and 50, the survey found.

Close to 90% of parents use one or more milestones in their children’s lives to initiate conversations with them about financial matters, the results indicate. Plus, among parents who work with a financial advisor, 64% have shared with their children some form of advice received from their advisor.

david tyrie“There are three things that jump off the page with our latest survey,” said David Tyrie (left), head of personal retirement solutions for Bank of America-Merrill Lynch, in an interview with AdvisorOne. “We get a lot of insight as to what parents are doing with respect to financial planning in their families, the results reinforce current health and wealth concerns and what they mean for clients, and we see that finding the right financial advisor is a critical success factor.”

The cost of college education is a significant concern for 46% of affluent vs. 41% in January 2011. Americans overall, according to the survey, and this concern jumps to 99% among the younger affluent (ages 18 to 34).

High health-care costs now tops the list of financial concerns for most affluent investors, 70% in June 2011 vs. 64% in January, while retirement income is also on the minds of the affluent, 65% vs. 57% in January 2011.

As for the top financial, economic and political concerns that may be contributing to fears over retirement security, the national debt is the highest concern, 81%, followed by budget battles in Washington, D.C., 73%. 

Meanwhile, the survey found that more than half (56%) of the affluent population does not rely or anticipate relying on an inheritance to help fund their retirement; with an additional 28% who do not anticipate receiving an inheritance whatsoever. As such, 75% of affluent Americans are saving and investing for retirement as though they’re not going to receive an inheritance.

“These are investors’ long-term views reflecting how they think about financial planning, and these view don’t change” with short-term market movement, Tyrie explained. “As they work with a financial advisor and develop long-term plans, we have to consider such [market] factors, but we want people to react appropriately based on their current situation and the big picture.”

Advisors in Focus

The top reason cited by investors in selecting their advisor was the fact that the FA took time to get to know them and their needs, 60%. Accessibility, 49%, and referrals, 48%, were other important reasons, along with a good personality, 47%. Having a solid track record of investment returns mattered most to 43% of those surveyed.

The research also indicates that 62% of financial advisors work with more than one member of an affluent family, such as a sibling, parent or adult-age child. However, when asked which family members also work with their advisor, just 65 percent of couples indicated that their spouse or partner participates   

Working with an advisor is about “life-long planning and long-term relationships,” Tyrie said, who notes that the field is a challenging one to be in today given the growing nature of client needs.

Close to 80% of affluent investors speak with their financial advisor at least quarterly, men (83%) slightly more frequently than women (74%). Women are more loyal to their advisors, though, with 71% staying with an FA for six or more years vs. 43% for men.  

“It’s very good to see the importance of financial advisors, how affluent investors are interviewing multiple advisors, and how they are thinking about which advisor can best meet their needs,” he explained. “The right advisor can make all the difference in the world.”


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