NEW YORK/CHARLOTTE, N.C., July 29, (RTRS): More Americans are losing sleep over money matters, such as saving enough for retirement, and half say their appetite for risk has diminished, according to a survey by Merrill Lynch.
Americans’ worries about supporting themselves and their extended families have increased significantly since the 2008 financial crisis. The top anxieties include healthcare costs and whether families have saved enough to sustain a certain lifestyle after retirement, the survey found.
“You’re seeing a modest to moderate trending upward in concern,” said Sallie Krawcheck, Bank of America’s president of global wealth and investment management.
Merrill Lynch, the brokerage unit of Bank of America Corp, conducted the June survey of 1,000 US residents with $250,000 or more in liquid assets.
Investors are skittish after the markets were rocked by the worst financial crisis since the 1930’s Great Depression.
Global equity markets lost nearly $31 trillion in value from the 2007 peak to the end of 2008, meaning investors on average saw their stock portfolios sink by half, according to Bank of America and CapGemini’s latest World Wealth Report.
Some of those losses were recovered in 2009 as global equity markets rebounded to just above 2005 levels; but in the United States many investors are still poorer than they used to be.
The crisis, paired with high US unemployment and fears that the economy will again contract after a brief recovery — the “double dip” — have made investors more gunshy.
Half of all affluent investors reported a lower tolerance for risk in the June survey, compared with the year before, and are moving into more conservative investments like money market funds or cash deposits.
Krawcheck said one of the industry’s emerging, long-term concerns is the lower acceptance of risk in investors between the ages of 18 and 34 — generally those introduced to financial markets since the Internet bubble collapsed in 2000.
In the survey, 52 percent of respondents in that age bracket said they were gravitating toward conservative investments. Only retirees at least 65 years old were more conservative.
“This could be a Depression-like generation,” Krawcheck said. The shocks of the financial crisis and the dot-com crash may make such investors permanently skittish of high-risk investments, she said.
“The risk as they focus on cash-heavy investments is that if inflation re-emerges, they may begin moving backward year after year, rather than building toward retirement,” she said.
The survey also found that employees want their employers to offer more help with regard to managing their self-directed retirement plans, the 401(k) plans that have replaced defined-benefit corporate pensions as the primary source of retirement savings for Americans.
Forced to be their own investment managers Americans want their companies to offer personalized advice, financial education and guidance about issues such as saving for college and budgeting.
“We’re still in a world where the individual will have control,” Andy Sieg, Bank of America’s head of retirement and philanthropic services, told Reuters in an interview. “But we’re now swinging in a direction where they want deeper levels of support.”