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Recently, Northern Trust launched a survey of 1,700 wealthy households across the U.S. to understand what is important to them. The results provide insights into high-net-worth individuals: top goals, concerns about the economy, investing and charitable giving behaviors.
Goals are important, but since family discussions about wealth and financial goals are difficult they do not occur as regularly as they should.
- 81% of investors say that life goals are an important component of financial planning.
- They cite their top four financial goals as protecting wealth, assuring retirement lifestyle, minimizing taxes and leaving an estate to their heirs.
- Their top life goals are having good health, traveling the world and achieving financial success.
- Investment diversification is the most common action investors have taken to help achieve their goals followed by saving more and working with a financial advisor.
- Despite the importance of goals, many couples say they discuss vacation plans more frequently than financial plans.
- As wealth increases, spousal or partner involvement in financial decisions decreases.
- However female decision-makers are more likely to regularly discuss finances with their partners.
- 26% have not yet talked to their children about wealth, and of this group 35% indicate they do not plan to speak to their children about wealth.
Uncertainty about the economy may be causing investors to be more reactive about their investment decisions, leading them to ignore long-term goals.
- Two-thirds of those surveyed believe the country has yet to get back on course since the financial crisis of 2007-2008, and fewer than half believe the U.S. economy will be better off in five years.
- Only 53% express confidence they will achieve their goals compared to five years ago.
- Market stability is the top reason they feel the way they do about the future of the U.S. economy.
- 63% are willing to take a calculated risk.
- 52% are always looking for a new investment.
- The likelihood of owning stocks, bonds, ETFs and real estate increases as wealth increases.
- Investors are diversified across asset classes with stocks, mutual funds and ETFs accounting for just over 50%.
- 30% are now more likely to seek out alternatives than they were five years ago.
The wealthy are seeking guidance and support from a financial advisor due to doubts about the economy and the ability to achieve their goals.
- 57% of HNW investors either rely on or consult with a financial advisor prior to making a decision.
- Only 28% of investors consider themselves their primary financial advisor.
- 41% indicate they need more advice than in the past.
- 6 out of 10 investors are willing to pay for advice.
- 74% prefer to work with one financial institution.
- When they seek out specialty advice, the top three areas are tax planning, estate planning and investment expertise.
- 56% of investors say they like to be actively involved in financial management, however only 11% say they have established a financial plan as a way to achieve their goals.
Wealthy households provide substantial amounts of both financial support and volunteer hours to charitable causes.
- 94% contribute to at least one nonprofit or charitable cause they believe in.
- While the reasons for charitable donations are primarily altruistic, 50% donate to reduce tax exposure.
- 65% say that helping children develop an appreciation of giving is important to them.
- In 2011, high-net-worth individuals contributed to charitable causes an average of $83,000 and donated 113 volunteer hours.
- 70% of households donate time to charitable causes.
Source: Northern Trust Wealth in America Survey 2012, northerntrust.com/wealthinamerica.