Americans are more risk averse and worried: Merrill

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 U.S. residents with US$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 US$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 U.S. 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.

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.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Terms

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos
 Respond to this email