While it may come as a surprise to many, a new study finds that even those at the top of the income and wealth scale are among those who worry they might outlive their savings.
According to findings from the high-net-worth section of Northwestern Mutual's 2023 Planning & Progress Study, nearly half (47%) of U.S. adults with more than $1 million in investable assets believe that their financial planning still needs improvement, and a third (33%) think it’s possible they could outlive their savings.
One positive is that the study finds that 84% of wealthy people say they have a long-term financial plan that takes into consideration up and down economic cycles; that compares to 52% who say the same among the general population.
“Wealthy people hold themselves to an exceptionally high standard when it comes to managing their finances,” notes Aditi Javeri Gokhale, chief strategy officer, president of retail investments and head of institutional investments at Northwestern Mutual. “They don't go on autopilot. Instead, they aim to see well beyond today. That includes the possibility of twists and turns in their financial lives.”
In fact, when it comes to financial planning, the firm notes that its research reveals seven financial habits that American millionaires tend to employ.
1. Focus on the big picture
2. Act but don’t overreact
3. Be open to improvement
4. Don’t take chances
5. Stay optimistic about what you can’t control
6. Stay connected with others
7. Seek professional finance advice
Trust in Financial Advisors
The study also finds 7 out of 10 (70%) wealthy Americans work with a financial advisor—nearly double the amount of the general population (37%).
What’s more, over half (53%) of wealthy people consider advisors to be their most trusted source of financial advice—which is more than four times any other source. Spouses/partners ranked a distant second at 11%, followed by business news at 10%.
That said, the study further shows that recent economic uncertainty has led to a re-evaluation among some wealthy Americans. Nearly half (48%) of wealthy people who work with an advisor said that—if they were seeking a change—they would select another advisor who could offer more comprehensive financial guidance than their current advisor.
Also notable is that slightly more than a third (34%) said they would switch to an advisor who has a better understanding of their life stage and priorities.
“It’s wise for the wealthy to seek out a second opinion about the strength of their financial plans,” Javeri Gokhale further emphasizes. “Periods of uncertainty like the one we're in now are spurring people to take inventory about the choices they've made and reconsider if their advisors are the right fit for them. As more affluent Americans intentionally seek out comprehensive financial advice instead of individual financial products, I expect to see this trend of second-opinion-seekers to grow,” he notes.
The study was conducted by The Harris Poll on behalf of Northwestern Mutual among 2,740 U.S. adults aged 18 or older with oversamples of Gen Z & High Net Worth (total household investable assets, excluding pensions, retirement plans and property, greater than $1,000,000). The survey was conducted online between Feb. 13 and March 2, 2023.