Merrill Lynch Affluent Insights Quarterly Survey Finds Road to Recovery Paved with Ongoing Retirement and Health Care Concerns at Every Life Stage

NEW YORK, April 20 /PRNewswire/ -- Bank of America today announced findings from the latest Merrill Lynch Affluent Insights Quarterly, a survey of the values, financial priorities and concerns of affluent Americans and the opportunities and challenges they face. The third in this series of quarterly surveys examines how the affluent view and approach retirement, investing and their credit and liquidity needs differently during pivotal life stages.

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Since the beginning of this year, affluent Americans have become slightly less concerned about the economy's impact on their ability to meet financial goals, with 49 percent currently expressing such concerns, compared with 58 percent in October 2009. Despite declining economic worries, issues related to retirement and rising health care costs continue to rank highest among financial concerns. Among those who identified health care as a top concern (62 percent), more than half (56 percent) reported feeling unsure of how rising costs should factor into their retirement planning, up from 40 percent in January 2010. This may help explain why the number of survey respondents concerned about whether their assets will last throughout their lifetime rose from 53 to 61 percent during the last quarter.

"Clients and prospects we've been speaking with recently echo the findings of our latest survey," said Sallie Krawcheck, president of Bank of America Global Wealth and Investment Management. "People are feeling better about the economy but still worry about the sustainability of the improvements and have big questions about what to do next. They want to preserve capital, minimize risk and hopefully make up some of their losses, but they're not entirely sure where to begin. This desire for guidance bodes well for wealth managers who are willing to really listen and give clients what they need."

Generational Retirement Outlook

Perceptions about the current and future state of retirement planning and living reveal notable differences among age groups and reflect a desire for continued retirement reform:

• Consistent with previous survey findings, affluent individuals over the age of 65 appear to be working longer and approaching retirement practically and altruistically – focusing most on spending more time with family and friends (67 percent). Interestingly, just as many in this age group plan to dedicate time to philanthropic endeavors as those who intend to spend more time traveling during their retirement years (45 percent in both cases).

"Our study continues to underscore an evolving approach to retirement, with many individuals choosing to remain active in their current careers, if only part-time, into their late 60s and 70s, pursuing dream jobs and devoting more time to charitable causes," said Andy Sieg, head of Retirement and Philanthropic Services, Bank of America Merrill Lynch. "Our retirement income and investment solutions are designed to help clients stay on track toward achieving and sustaining their retirement goals."

• Affluent baby boomers ages 51-64 are the group most concerned about whether their assets will last throughout their lifetime (73 percent) and whether they will be able to live the lifestyle they had hoped to in retirement (61 percent). In fact, 40 percent of survey respondents in this age range expect to retire later than they did one year ago. This may be due in part to nearly one-third (31 percent) of these individuals currently supporting, in some or most ways, both their children and parents. Often referred to as the Sandwich Generation, more than 45 percent of this group have had to make lifestyle sacrifices to support the needs of their family, 44 percent have significantly cut back on personal luxuries, 26 percent are now saving less for retirement, and 19 percent have invited their adult-age children and/or parents to live with them in order to help cut down on monthly expenses across the family.

• Individuals ages 35-50 echoed similar levels of longer-term concerns about health care, retirement lifestyle and income. However, across all groups, 35 to 50-year-olds face the greatest struggles with also balancing short-term financial priorities and concerns, such as funding their children's education (52 percent) and knowing how best to manage a proper cash flow and liquidity strategy (31 percent).

• Younger affluent individuals ages 18-34 indicate they simply lack the financial education needed to make the best decisions early in life to maximize their long-term savings and investments. When asked what they find most challenging about retirement planning, 23 percent said "knowing where to begin" while 24 percent find "understanding various tax implications associated with different retirement savings vehicles" to be most challenging.

Retirement Reform

During the last year, the Administration has outlined a number of initiatives aimed at helping to increase positive retirement savings actions among Americans earlier in their lives and careers. However, 52 percent of survey respondents believe that more could be done to assist individuals in their retirement saving efforts. For instance, 50 percent of these respondents believe that health care coverage should be provided to all retirees, while 44 percent believe that more financial resources should be put toward Social Security. In fact, nearly half (47 percent) of all affluent Americans ages 35-50 assume Social Security will not play a role in their retirement, and nearly 70 percent are skeptical about Medicare, believing it will play little to no role in offsetting medical expenses during their retirement years.

Nearly 65 percent of affluent Americans under the age of 50 would like to see the maximum contribution limit for IRAs and employer-sponsored retirement plans (such as a 401(k)) raised beyond that which is currently permitted. Also, 44 percent believe more programs should be established that provide greater education in the workplace about how to save successfully for retirement. In fact, more than 60 percent of those under the age of 64 indicate that they either currently or would take advantage of such financial education or advice services if offered by their employer.

Credit and Liquidity Strategies

In addition to retirement outlooks, the latest survey also examined credit and liquidity behaviors and concerns among affluent Americans. When used in conjunction with a holistic and personalized approach to banking and investing, credit and liquidity strategies can often help to address short-term financial needs and enable individuals to live the lifestyle they want to today without impacting long-term investment strategies.

Overall, maintaining the lifestyle to which they are accustomed is affluent Americans' top short-term financial concern (36 percent). However, those ages 51-64 are most concerned about accessing the short-term liquidity and cash flow they need to cover regular monthly expenses. Meanwhile, 31 percent of those ages 35-50 are simply seeking a better understanding of how to manage their short-term liquidity and cash flow needs.

Many affluent survey respondents feel they do not take full advantage of the credit and lending options available to them (42 percent). Others do not see credit as a vehicle that can help them reach their financial needs and goals (36 percent), or opt to use it only in the event of an emergency (28 percent). These results indicate that affluent Americans may benefit from a better understanding of credit and liquidity solutions that, when used properly, can offer an effective approach to meeting short-term goals while avoiding disruption of long-term investments.

Affluent Engage Financial Advisors with Greater Frequency

Among the nearly half (44 percent) of affluent Americans working with a financial advisor, the survey finds 75 percent engage with their advisor at least quarterly, and 41 percent at least monthly. While this frequency is fairly consistent with the previous two quarters, the number of individuals speaking with their financial advisor weekly has steadily risen from 8 to 13 percent during the last six months.

Approximately 63 percent of affluent Americans working with a financial advisor have been doing so for more than six years, and nearly 40 percent for more than 10 years. More than one quarter (27 percent) wish they had started working with their financial advisor earlier, indicating many affluent Americans believe financial planning should begin at an earlier stage in life. Among the 56 percent of those who do not work with a financial advisor, 25 percent believe they would benefit from such a one-on-one relationship.

When asked to indicate the importance of various financial advisory services, affluent Americans cited the following as top priorities:

• Proactive investment advice (71 percent) and check-ins to help ensure they're on track with their financial plan (69 percent).
• Financial advice to live the lifestyle they want in the future (70 percent) as well as today (63 percent).
• Holistic, overall financial planning (66 percent).
• Help to ensure necessary cash flow/liquidity (62 percent).
• A plan to support philanthropic priorities (42 percent).

"During this pivotal year, it is important that affluent investors actively examine their portfolios to take advantage of recovery-related opportunities," said Lyle LaMothe, head of U.S. Wealth Management for Merrill Lynch Wealth Management. "Whether it's help building or adjusting investment strategies for the future, managing risk or focusing on near-term liquidity and day-to-day cash flow needs, our experienced Financial Advisors work closely with clients to help them minimize complexity and capitalize on opportunity."

Affluent Insights Quarterly Methodology

Braun Research conducted the Merrill Lynch Affluent Insights Quarterly survey by phone between March 3 and March 15, 2010 on behalf of Merrill Lynch Global Wealth Management. Braun contacted a nationally representative sample of 1,000 affluent Americans with investable assets in excess of $250,000, and oversampled 300 affluent Americans in each of 14 target markets including Atlanta; Boston; Charlotte; Chicago; Dallas; Los Angeles; Miami; Minneapolis; Orange County, Calif. (Irvine, Laguna Hills and Newport Beach); Philadelphia; Phoenix; San Francisco; St. Louis; and Washington, D.C. The margin of error is +/- 3.1% for the national sample and +/- 5.7% for the oversample markets, with both reported at a 95% confidence level.

Bank of America

Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 58 million consumer and small business relationships with more than 5,900 retail banking offices, more than 18,000 ATMs and award-winning online banking with nearly 30 million active users. Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 150 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

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