Fewer Households Reaching $100,000 Retirement Investment Threshold

Taxable assets have climbed steadily since 2004, when they were just $12.9 trillion; retirement assets fell sharply after the crash and are now just slightly larger than they were at their 2005 peak of $10.5 trillion.

Varas says the study also indicates that investors’ opinions on financial advisors have changed considerably during the past few years.

“For some households, the drop in asset segment was because of personal investment choices, and a segment of those are now seeking the help of a professional financial advisor, a behavioral segment identified by Hearts & Wallets as ‘Upshifters,’” said Varas. “Other households suffered the decline while having professional financial advice, and some, ‘Downshifters,’ now question the value of that advice and whether they might make better choices themselves. We were already seeing investors want to better understand the value of what they are paying for. This disruption is accelerating that trend.”

Many affluent asset segments shrank in numbers:

• The $2 to $5 million, and the $250,000 to $500,000, segments were particularly hard hit. The $250,000 to $500,000 asset segment now totals 6.4 million households, down about 25 percent from 8 million in 2009. This segment is concentrated in the 45 to 54 and 55 to 64 age groups as in 2009. This group controls $2.5 trillion in assets, down from $2.9 trillion with the decline occurring in retirement accounts and managed investments.
• The $1 to $2 million and $100,000 to $250,000 segments grew, as they received households that shifted down into these asset segments.
• Among the poorest Americans, the median households with very little to lose lost nothing. The median household in the 25th to 49th wealth percentiles lost $10,700. The 50th to 75th percentiles (corresponding to the $50,000 to $100,000 wealth segment), lost $40,000. For the 75th to 89th percentiles (from above $100,000 to just under $500,000), the median household lost $134,000. The worst one-quarter of households lost $261,000, but the best one-quarter actually improved relative to peers.

“The shifting of assets has been dramatic, illustrating the challenge in offering asset-based pricing services to investors,” said Chris Brown, of Sway Research. “How much money someone has at a point in time is not a particularly insightful descriptor of their interests or concerns. The financial services industry needs to understand this when developing investor servicing models.”