Outlook Brightens for Mass-Affluent Consumers

The mass affluent are expressing less anxiety about retirement and health care costs than they did six months ago.

The attitude could indicate a more stable outlook for one of the fastest-growing segments of the economy—consumers with $50,000 to $250,000 in investable assets—according to the Fall 2012 Merrill Edge Report.

“We are beginning to see a positive shift in perspective in how mass-affluent consumers view their future,” said Dean Athanasia, president of preferred and small-business banking at Bank of America. “This improvement is not just indicative of a changing mindset—we’re seeing our clients take action. Our mass-affluent clients are working to gain more control over their future, including the education of their children, by investing more in both retirement and college savings accounts compared to last year.”

While college education continues to be a major concern, this group is also taking greater responsibility for their finances. Seventy-three percent of the mass affluent fear that their retirement assets will not last throughout their lifetime, a drop from 83% who believed this in April, and 84% of this group are concerned about the rising cost of health care, also down from 89% in the same period.

Sixty-nine percent of mass-affluent couples discuss their finances at least a few times a month. In fact, more than one-third (34%) of married mass-affluent Americans are discussing their finances more than their sex life. These conversations are leading to greater confidence among mass affluent couples, as 64% believe that these ongoing conversations with their spouse or partner will help them achieve their financial goals.

Members of Generation Y (those 18 to 34 years old) continue to have concerns about their financial future and are the most concerned generation when thinking about the impact of the economy on their ability to meet financial goals at 83% (compared with the national average of 75%). Yet, they are planning ahead and seeking out financial information and counsel to gain control.




Half (52%) of mass affluent have saved less than $250,000 for retirement. As a result, more than half of respondents plan to retire later than they had one year ago (56%), a year-over-year increase of 19% from November 2011. Three in four (73%) mass affluent who are between 10 and 19 years away from retirement have made changes to the way they save for retirement over the past year, with 36% trimming everyday costs to bolster their savings and 21% starting to work with a financial adviser.

Managing their investments and planning for their retirement are the top two tasks (both 38%) mass affluent have taken on more responsibility for now than in the past, closely followed by managing debt and setting up an emergency fund at 35%.

Three-quarters (76%) of mass-affluent Americans are seeking some expertise to help them manage important financial tasks. Approximately one-quarter are seeking out expertise to help them properly allocate their portfolio (29%), create an overall financial plan (28%) and save for their retirement (25%), while only about one in ten are consulting an expert for less complex tasks such as setting up an emergency fund (12%) and saving for children’s college education (11%).

“As the economy continues to improve and the mass affluent take on more and more financial responsibility, they are looking to strike the right balance between managing their finances on their own and seeking out help from a financial adviser,” said Alok Prasad, Merrill Edge executive at Bank of America. “More than half of mass affluent say knowing the right resources to tap is the most complex part of managing their finances. They want financial management to be simplified, advice and guidance to be accessible.”

For more about the mass affluent, read the entire Merrill Edge Report or watch the Merrill Edge Report video presentation.

The Merrill Edge Report, released by Bank of America, is a semi-annual study of the financial concerns and priorities of the mass affluent. Ketchum Global Research & Analytics and Braun Research conducted the survey by phone between August 20 and August 28 on behalf of Bank of America. Survey participants were 1,001 adults in the U.S. with investable assets between $50,000 and $249,999, and an oversampling of 300 mass affluent in San Francisco and Los Angeles.