Affluent women are more concerned and less confident about retirement than affluent men, while younger investors who have more than $250,000 in investable assets have become surprisingly conservative about investing for retirement, according to a new Merrill Lynch survey released today.
Only one-third of affluent women had full confidence in their ability to meet their long-term financial goals, compared to half of their male counterparts with more than $250,000 in investable assets surveyed by Braun Research for the Merrill Lynch Affluent Insights Quarterly.
In addition, seven in ten women surveyed expressed concern about rising health care costs and expenses, compared to just 57 percent of men. And 63 percent of women were worried about retirement assets lasting, in contrast to 52 percent of men.
“We’re seeing starkly different findings between men and women,” Andy Seig, head of retirement services for Bank of America Merrill Lynch said at a news conference Monday morning. “Women are more aware of their longer life span, and while men tend to look at retirement like a chief investment officer, women are approaching it more as a chief financial officer, taking into account factors like income streams.”
While about two-third of women surveyed said they planned to be more active in their community and philanthropy during retirement, less than half of men had similar aspirations. “Women want to be socially involved in retirement,” said Sharon Oberlander, a Merrill Lynch managing director and wealth management advisor who heads the Oberlander Group in Chicago. “We’re seeing women align their investment philosophy with their values.”
In fact, retirement goals between couples are often so divergent that advisors often need to help them reconcile and “act as mediators,” she said.
One of the most surprising findings of the survey was the revelation that affluent Americans between 18 and 34 years old (mean age of 31) are the most conservative of any age group in terms of their preference for lower risk investments for retirement. Nearly 60 percent of the 18-to-34-year-olds surveyed described themselves as conservative investors, compared to 51 percent of those surveyed age 65 and over, 44 percent who are between 35 and 50 years old and 39 percent between 51 and 64 years old.
“It’s a very serious phenomenon,” said Lyle LaMoth, head of U.S. Wealth Management for Merrill Lynch Wealth Management. “The number of conservative young investors can’t stay at 60 percent if they are going to achieve their financial goals and help the economy.”
Young investors may have become more conservative because they were extra aggressive before the 2008 market collapse, but this conservatism underscores the need for better investor education, said Oberlander. Bill Moran, a Merrill Lynch wealth management advisor based in Washington, D.C., agreed and said younger clients who were burned by the market downturn have become preoccupied with the potential downsides of investing.
“We need to let them know how important the upside is as well for long-term planning,” Moran said. Indeed, according to the Affluent Insights survey, 25 percent of investors do not sufficiently understand the limits of conservative investing—how it can prevent them from “seeing high rewards during stronger market conditions.”
Braun Research surveyed 1,000 individuals with $250,000 in investable assets or more by phone in December 2010.