U.S. affluent feel more in control of finances than a year ago

Reuters News
Posted: Sep 27, 2012 12:16 AM
U.S. affluent feel more in control of finances than a year ago

By Jennifer Hoyt Cummings

(Reuters) - Affluent Americans feel more in control of their finances and say they are less conservative with their investments than they were a year ago, according to a bi-annual survey released on Thursday by Merrill Lynch Global Wealth Management.

Wealthier investors recognize there is likely to be more volatility ahead thanks to the November U.S. elections, the looming fiscal cliff and continued uncertainty in the European Union, but they feel confident when it comes to their personal finances, said Ted Durkin, head of the Merrill Lynch Affluent Client Segment.

That uptick of confidence came in part from changes affluent investors have made in their financial lives.

Those participating in the August poll of 1,000 people with investable assets of over $250,000 said they are living more within their means, making more joint investment decisions with their spouses and setting tangible goals for their future.

"People have done a great job of controlling what they can control," Durkin said.

Thirty percent of wealthy investors described their investing approach as conservative this year - down from 36 percent in 2011 and 50 percent in 2010.

That shift may be, in part, because investors have become used to volatility, not because they see tangible improvements in the economy. Almost half of the respondents said they see economic uncertainty as a "new normal" that will be here for the foreseeable future.

Younger affluent investors are more confident. Nearly two-thirds of those between 18 and 34 years of age said they think their financial situation will improve next year, citing an ability to take advantage of investment opportunities.

Tony Montanari, a financial adviser who manages $26 million in client assets for Charlotte, North Carolina-based ACM Wealth Management, agreed that the wealthy are getting more aggressive in their investments. But, he said, they might be disappointed.

"People should have been the most aggressive and the least conservative four years ago when the market bottomed," he said.

Heather Walsh, a financial adviser with Merrill based in Burlington, Massachusetts, said she's stressing to her clients that even though the markets have improved, it's critical to stay focused on budgeting and saving. That, in turn, can make them less reliant on unrealistic market returns, said Walsh, whose team manages $500 million in client assets.

That message may resonate with wealthier investors. Despite increased confidence in their financial situation, four out of five of those polled in Merrill's survey said they were concerned about accomplishing certain financial goals, like having enough money to sustain their lifestyle in retirement and buying their dream home.

And only 38 percent of parents paid or plan to pay the full cost of their children's college education, down from nearly 48 percent a year ago.

(Reporting By Jennifer Hoyt Cummings; Editing by Jennifer Merritt; Twitter @jenhoytcummings)