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Wealthy Americans Reveal How They've Picked Advisors, Investments in the Pandemic

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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.

Financial Advice

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.”

‘Opening Up’

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.

However, they have become increasingly comfortable talking about changes to life plans due to financial concerns — 72% today vs. 66% 20 years ago — and how market volatility affects their personal investments — 71% today vs. 63% 20 years ago.

Millennials are even more comfortable talking with friends about all types of financial topics today, compared with other generations, the survey found.

The Modern Investor

Looking back to the turn of the century, 89% of Gen X, baby boomer and senior respondents said they were satisfied with the financial decisions they had made.

However, one in three said they would have done things differently, two-thirds wished they had saved more, and three in five regretted they had not started to save and invest earlier.

As to what they consider the most prominent threats to their future financial success, respondents across generations expressed concern about factors outside of their control, including 62% who cited economic recession, 55% market volatility, 50% rising cost of healthcare and 44% continuation of the global health crisis.

“The health crisis has caused many people to take stock of their life priorities and to control what they can during a period of uncertainty,” Levine explained, in a statement.

“In addition to getting their finances in order, people are looking ahead at new possibilities, plotting a course for their future and engaging with educational resources and advice that will help them make informed financial decisions and pursue new and exciting goals for themselves and their families,” he added.

Concentrix conducted the online survey Oct. 28 to Nov. 5 among 2,000 affluent respondents throughout the U.S., defined as aged 18 to 24 with investable assets between $50,000 and $1,000,000 or aged 25-plus with investable assets between $100,000 and $1,000,000.

Not Their Parents’ Definition of Success

The survey found that the vast majority of affluent Americans are prioritizing many traditional milestones in life, including owning a car, owning a home, saving their goal amount for retirement and paying off credit card debt.

In fact, 84% of respondents said they plan to achieve or have already achieved one or more financial milestones earlier than their parents, and 53% said they have already achieved or plan to achieve five or more financial milestones earlier than their parents.

However, when asked about the most important measures of personal success today, respondents chose less financially focused ones — good health, 63%, and supportive family and friends, 59% — over such options as having a stable source of income, 51%, or enough money to maintain a desired lifestyle, 47%.