We sought financial advice too late, say rich retirees

Jan 14, 2010 @ 12:17 pm

By Hilary Johnson

Most affluent retirees wish they had started working with a financial adviser earlier. They're also looking for more than just investment management from their adviser, according to a survey released today by Sallie Krawcheck's wealth management group at Bank of America Corp.

More than half (55%) of respondents to a survey conducted by an outside party for BofA said they should have started talking to an adviser earlier as they neared retirement.

“From an industry perspective, this is more than an opportunity; it's an imperative,” Andy Sieg, head of retirement and philanthropic services at Bank of America Merrill Lynch, said during a media call to discuss the results of the survey.

Mr. Sieg, Ms. Krawcheck, who is president of global wealth and investment Management at BofA, and Aimee DeCamillo, head of personal retirement for Merrill Lynch Wealth Management, also said during the presentation that affluent individuals are looking for a broader and deeper relationship with their advisers.

“It may be odd to hear a financial services firm talk about softer issues,” Ms. Krawcheck said, but “what we're learning is that our business is really becoming a business of solving problems with people.”

Retirees and those contemplating retirement are concerned about health care costs, for example, as well as making sure their assets for retirement last through their lifetimes. But importantly, about half of the retirees surveyed said they wish they had spent more time thinking about how they wanted to live during retirement, and they recommend that those nearing retirement age give lifestyle and goals careful consideration.

For its part, the recession took a toll on the well off, the survey showed. Still, a majority said that they were able to learn some valuable lessons, including a renewed focus on the important things in life, such as family and friends.

In the past 12 months, 48% cut back on energy costs, 43% spent less on personal luxuries, and 30% vacationed less. A smaller percentage, however (21%), said they scaled back on charitable donations.

Ms. Krawcheck, Mr. Sieg and Ms. DeCamillo suggested that these changes in priorities may be lasting, given what the nation saw from the effects of the Great Depression. The recession has the potential to shape spending and financial planning for “years and years, if not decades, to come,” Ms. Krawcheck said.

The survey was conducted last month for BofA Merrill Lynch by marketing research company Braun Research Inc. Braun surveyed 1,000 Americans who have investible assets of $250,000 or more. This was the second such survey released by BofA Merrill Lynch; the first was done in October 2009.

A separate survey released Thursday also suggested that there's room for advisers to get more involved in the wealth management area.

Households with a net worth of $5 million to $25 million, not including primary residence, tend to keep control of their investments, investing 47% themselves with no professional help, consulting firm Spectrem Group said in a report. These wealthy individuals give only 20% of their assets to advisers for them to control.

“They are also keeping a strong hand in the management of their assets,” George H. Walper Jr., president of Spectrem Group, said in a press release. Spectrem's findings were based on a survey of 523 households in November.


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