A majority of people with $10 million or more in investable assets feel financially secure, but some still worry about retirement, says a new study by U.S. Trust.
Seventy-two percent of ultra-wealthy survey respondents feel financially secure now and 59 percent feel financially secure when they think about the future. However, among those who do not feel secure, the top fear by far is not having enough income in retirement (77 percent).
That concern is followed by the worry that their financial situation could change at any moment (36 percent), uncertainty about job security and income potential (30 percent), and concern that they cannot afford the lifestyle they want to live (22 percent). Respondents were allowed to select more than one answer.
The survey, 2013 Insights on Wealth and Worth, was conducted by U.S. Trust Bank of America Private Wealth Management. The bank surveyed 711 individuals with $3 million or more in investable assets, about a third of them "ultra-wealthy" individuals with more than $10 million.
Chris Heilmann, chief fiduciary executive at U.S. Trust Bank of America Private Wealth Management, says he is encouraged by how high the numbers are for those who feel financially secure. The fact that they have concerns about retirement and other issues shows they have aspirations to continue to live in the style to which they have become accustomed and that they are looking beyond the $10 million.
The survey also found that the ultra-wealthy seem to have not explored the implications of the recent tax changes. Only 25 percent of those with more than $10 million in investable assets feel very well informed about the impact of the tax changes on the total return of their investment portfolio, and only 28 percent feel informed about the impact on their income.
Sixty-eight percent do not plan to make changes in their investment strategy to minimize taxes, the survey says.
“The fact that 75 percent of the people with $10 million plus in investable assets do not feel well informed about the tax changes tells me that the advisory community is not doing enough if that number is that high,” Heilmann says. “As an advisor, I should be telling myself to pay attention and be certain my clients have this conversation with me” about the tax changes.
Individuals with $3 million or more in investable assets are not anxious to turn over information about their families’ wealth to their children, according to the survey. Only 39 percent of parents whose children are 25 years old or older have fully disclosed their wealth to the children, according to the survey. Fifty-three percent have disclosed a little about their wealth and 8 percent have disclosed nothing at all.
A primary reason for not discussing wealth is that parents fear it will negatively impact their children’s work ethic, the study shows.