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America’s millionaires are cautiously optimistic


One year after the depth of the financial crisis, America’s millionaires are feeling somewhat better about their financial futures, but their sense of personal financial security has not yet returned to pre-2009 levels, according to the 11th annual Phoenix Wealth Survey conducted online by Harris Interactive.

“People with wealth tend to have good financial insights. While their attitudes may not be a true leading indicator, they are worth noting as we consider the prospects for economic recovery,” says Walter H. Zultowski, senior adviser for Phoenix. “This year’s survey found that concerns have moderated and optimism has increased regarding the nation’s economy over the next one to two years.”

Last year, for the first time in recent years, high-net-worth consumers experienced a “negative wealth effect,” with much more than half (74 per cent) feeling less wealthy than they had the year before.

These consumers have recovered significantly in 2010, with only 52 per cent now feeling less wealthy compared to last year, but they are still in negative wealth effect territory.

Further, the change was driven by those saying they are “slightly wealthier” versus “wealthier” or “significantly wealthier.”

“If our respondents’ intuition about the economy is on the money, we may be able to look forward to better days ahead,” Zultowski says.

In the first quarter of 2009, 40 per cent indicated they were either “very” or “fairly” pessimistic about the future of the economy. This year, that number is down to 28 per cent, and there has been an increase in the percentages saying they are “slightly optimistic” or “slightly pessimistic.”

In a new question this year, respondents were asked to agree or disagree with the statement, “The recession is over.” Although some economists say the recession is technically over, only 26 per cent of the high net worth “strongly agree” or “agree” with this statement.

Phoenix continues to see some fundamental changes in attitudes and behaviour that can be attributed to the negative wealth mentality that began in 2009.

In a new question this year, nearly half of the high-net-worth (46 per cent) either “strongly agree” or “agree” with the statement, “As a result of the financial crisis, I will not be able to leave my heirs as much money as I had originally planned.”

This year there was an increase in concern about paying for healthcare during retirement, likely fuelled by the current focus on healthcare reform. This issue is on top of a sustained increase in concern about the possibility of running out of money in retirement and an ongoing focus on protecting their lifestyle.

Having a written financial plan seems to help high-net-worth consumers feel more financially secure during difficult times. Not surprisingly, the percentage with a written financial plan was at an all-time high in 2010 – 44 per cent, up from 39 per cent last year.

As with financial planning, difficult financial times appear to drive greater use of advisers, with 79 per cent saying they receive professional financial advice on a regular basis, up from 73 per cent last year and close to the all-time high of 82 per cent in 2003 at the end of the post-9/11 bear market years.

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