Merrill Edge® Report Finds an Uncertain Future,
Shifting Priorities and Emerging Tech Are Drastically Changing How
Americans Seek Financial Guidance and Stability
One in three Americans says their financial stability is
dependent on receiving an inheritance. This is even true for 20
percent of baby boomers, many of whom are facing retirement, 36
percent of Gen Xers and 32 percent of millennials.
For Gen Z, today’s youngest generation (ages 18-22), this number
jumps to 63 percent, despite a strong majority (87 percent)
describing their approach to financial decisions as “do-it-myself.”
In fact, Gen Z is most likely to rely on financial assistance from
their parents (32 percent, compared to 19 percent nationally),
grandparents (17 percent, compared to 6 percent nationally) and
friends (17 percent, compared to 4 percent nationally).
These findings come from the latest Merrill Edge Report, which
finds that uncertainty about the future is creating an unexpected
dependence on others for financial security. Merrill Edge releases
this biannual report to take an in-depth look at the financial
concerns and priorities of mass affluent Americans.
“We’ve never seen such a strong reliance on receiving an
inheritance,” said Aron Levine, head of Merrill Edge. “With
shifting priorities and growing lifespans, Americans are finding
new ways to ensure their financial stability and are increasingly
looking to others. While it’s great to see investors thinking
ahead, the key to financial freedom is outlining and following an
action plan for short- and long-term goals beyond an inheritance —
which may or may not ever come.”
The survey of more than 1,000 mass affluent Americans also shows
that beyond an inheritance, respondents are becoming more likely to
rely on input from others than their own instincts when making
major life decisions, such as investing money (36 percent) and
retiring (22 percent).
Merrill Edge is committed to empowering its clients and helping
them plan for their financial futures, whether that’s with the help
of an advisor, through online channels or some combination of
both.
Conscious investing on the rise, but profits are most
important
While Americans are most likely to describe the stock market as
“volatile” (34 percent), it doesn’t appear to be deterring them
from investing. Most Americans (57 percent) say they made money in
the stock market in the past year. Seniors (68 percent) and Gen
Xers (67 percent) cite the most financial gains, with Gen Z at 54
percent.
Investors are also prioritizing social investments1 and
community welfare. When choosing investments, Americans say they
are more likely to invest in companies that:
- Pay women and men equally (87
percent).
- Promote diverse senior leadership (85
percent).
- Demonstrate a commitment to
environmental sustainability (82 percent).
- Provide three or more months of family
leave (78 percent).
- Support the LGBTQ community (61
percent).
- Share their religious beliefs (62
percent).
But Americans still value financial gains over social values, as
they are most likely to invest in stock based on market performance
(88 percent), closely followed by its ability to pay dividends (85
percent).
Further, 60 percent of respondents say they would be more likely
to invest in a profitable company whose values they disagree with
than a struggling company whose values they agree with (40
percent), as well as the most profitable company regardless of its
sector (57 percent) over a company with a focus on environmental
assets (43 percent).
The future of financial guidance is a hybrid of high tech and
high touch
According to the report, emerging technologies are also
drastically shaping the future, particularly where, how and when
investors seek financial guidance. In fact, one in five respondents
is more likely to rely on digital than in-person advice, and 69
percent of Americans believe all financial decisions will be made
with the help of technology in their lifetime.
Forty percent of respondents are already comfortable consulting
artificial intelligence (AI) for financial guidance. In fact, many
would trust AI to provide spending and saving guidance (45 percent)
and make investments (32 percent) – higher than the number of
Americans who would trust the technology to drive a car (28
percent), post to social media (28 percent) or select a wardrobe
(26 percent) for them.
Despite investors embracing technology, in-person advice is
still king. When it comes to making financial decisions, 81 percent
of Americans are most likely to turn to a financial adviser over
their closest confidants, including wealthiest friends (70
percent), older generations (69 percent), and even finance apps (50
percent).
“While we’re seeing rapid adoption of emerging technologies,
investors truly want the best of both worlds – digital and physical
– when it comes to decision-making, not one or the other,” said
Levine. “That’s why we take a high-tech and high-touch approach to
innovation at Merrill Edge, continuing to invest in new
technologies and solutions to meet clients where they are and help
them plan for their financial futures throughout their
lifetime.”
For more in-depth information about the financial behaviors and
priorities of mass affluent Americans, read the entire Spring 2018
Merrill Edge Report here. A complementing infographic is
available here.
1 Impact investing and/or environmental, social and governance
(ESG) managers may take into consideration factors beyond
traditional financial information to select securities, which could
result in relative investment performance deviating from other
strategies or broad market benchmarks, depending on whether such
sectors or investments are in or out of favor in the market.
Further, ESG strategies may rely on certain values based criteria
to eliminate exposures found in similar strategies or broad market
benchmarks, which could also result in relative investment
performance deviating.
Merrill Edge Survey MethodologyConvergys (an independent market
research company) conducted a nationally representative,
panel-sample online survey on behalf of Merrill Edge April 9-20,
2018. The survey consisted of 1,000 mass affluent respondents
throughout the U.S. Respondents in the study were defined as aged
18 to 40 (Gen Z/millennials) with investable assets between $50,000
and $250,000 or those aged 18 to 40 who have investable assets
between $20,000 and $50,000 with an annual income of at least
$50,000; or aged 41-plus with investable assets between $50,000 and
$250,000. For this purpose, investable assets consist of the value
of all cash, savings, mutual funds, CDs, IRAs, stocks, bonds and
all other types of investments such as a 401(k), 403(B), and Roth
IRA, but excluding primary home and other real estate investments.
We conducted an oversampling of 300 mass affluents in Atlanta. The
margin of error is +/- 3.1 percent for the national sample and
about +/- 5.6 percent for the oversample market, reported at a 95
percent confidence level.
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