Money On Their Minds: A Look At Investments (Part 2)

Last month, we began exploring the roles of money and financial services in the lives of Affluent Americans. This month, we dig deeper on Affluents (defined here as $100K+ annual household income) and their money. But first, a quick review of the key findings from last month’s initial look at Affluents and financial services…

  • Affluents are largely self-directed, with nearly three-fourths expressing personal responsibility for their financial security, and a similar number considering themselves “hands on” in the management of their personal finances.

  • Being self-directed doesn’t necessarily mean “going it alone” – 62% use a financial professional, and nearly one-fourth have a deeper reliance on advice (for example, 23% agree, “I usually consult a financial expert before deciding on money issues”).
  • Affluents skew cautious, with 42% agreeing, “I would describe my approach to investing as conservative and risk-averse,” while only 18% disagree. 



Affluents own a range of financial accounts, but there is nevertheless a relatively widespread interest in new offerings. In our bi-monthly survey, we recently asked Affluents about their interest in new financial service offerings across six different categories: credit cards, home/auto insurance, mutual funds, brokerage accounts, banking accounts, and financial professionals. In each one of these categories individually, about one-fifth of Affluents – roughly 12 million individuals – expressed an interest in new offerings. Collectively, nearly one-third of Affluents (31%) expressed interest a new offering in at least one of the six categories examined, a figure that rises to 57% among Ultra Affluents ($250K+ HHI). 

A deeper drill into the consideration drivers in each of these categories reveals a considerable sensitivity to fees and other cost-related factors. When considering credit card offerings, for example, 62% cite annual fees as “extremely important,” and 53% cite interest rates – by far the two most widely-considered factors (although, among Ultra Affluents, rewards are extremely important as well). This pattern of fee-sensitivity recurs across financial categories. When considering new checking/savings accounts, ATM fees and interest rates are particularly important. Fees and commissions top the list of considerations when evaluating mutual funds and brokerage accounts. Fees, premiums and discounts are the top factors shaping home and auto insurance decisions. The list goes on. Certainly other factors are important – trustworthiness in advisors, past performance of mutual funds – but there is no denying the central focus on fees and other purely financial considerations among Affluents and Ultra Affluents alike.

In the final analysis, Affluents may seem full of paradox when it comes to money: self-reliant but open to advice, affluent yet fee-sensitive, owners of multiple accounts who are nevertheless open to new offerings. It may simply be more accurate to describe them as discerning and having high expectations – expecting both quality and value, satisfied with what they have but still striving to improve, desiring advice but ultimately finding they must rely on their own instincts.

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