What You Need to Know
- About 44% of Bank of America poll respondents have changed their investment risk tolerance during the pandemic.
- Over half of affluent Americans are taking a self-directed approach to investing or using self-directed investing in combination with a financial advisor.
- Many investors have become increasingly comfortable talking about changes to life plans due to financial concerns — 72% today vs. 66% 20 years ago.
Many affluent Americans have re-evaluated how they save, spend and invest during the pandemic, according to a wide-ranging survey released Tuesday by Bank of America.
Nearly half of respondents said they have made no changes to their investment risk tolerance during this period. Among the 44% who have done so, they differ in how they have responded to market volatility, with 23% having been more aggressive and 21% more cautious.
Fifty-two percent of millennials say they are taking a more aggressive approach to their investing, compared with 23% of the national sample, and 55% of younger investors are managing their portfolios more frequently than they did prior to the pandemic, vs. 32% nationally.
During the pandemic, four out of five respondents have taken money they would normally have spent on entertainment, travel and dining and set it aside, with 52% putting it toward savings accounts and 25% toward emergency funds.
And when life returns to “normal” after the pandemic? Thirty percent of affluent Americans plan to spend more on grocery delivery, 27% on food prep/meal-kits, 26% on restaurant delivery, 25% on house cleaning and 22% on laundry services.
According to the survey, respondents seeking to learn about the market and manage their investments in light of recent events are turning to a variety of resources:
- Financial advisors, 45%
- Online investment management platforms, 37%
- Informational websites, 32%
- Friends or family, 30%
More than half of affluent Americans are taking a self-directed approach to investing or using self-directed investing in combination with a financial advisor for guidance.
Forty percent conduct their own research and fully manage their investments using online platforms, 28% consult a financial advisor only for investment advice, 16% use a combination of self-directed and a financial advisor for guidance, and 9% consult a only robo-advisor.
When choosing an advisor or online brokerage, 63% of investors consider credible reputation, 53% fees, 42% personal recommendations and 41% accessibility.
One out of five respondents say they prioritize socially responsible investing, with their top considerations including environmental impact/conservation, personal interest/use of the company’s products and equity for racial minorities.
In addition, two in five respondents say they would be more likely to consider investing in a company that provides pay equity for all employees and supports charitable efforts aligned with their own.
“No matter where our clients are on their investment journey, we’re seeing high levels of engagement with educational resources, the latest insights from our Chief Investment Office and personalized guidance aligned to their life goals,” according to Aron Levine, president of preferred and consumer banking and investments at Bank of America. “In doing so, our clients are redefining what it means to be an informed investor.”
The survey also found that people today are opening up more about certain financial topics than they did 20 years ago. Three out of four affluent Gen X, baby boomer and senior respondents have long been comfortable talking to friends about real estate decisions, health-care costs and their approach to saving for retirement.