Can You Be Financially Independent When the Foundation of Your Plan Relies on Others?

June 7, 2018 at 9:00 AM Eastern

One in three Americans says their financial stability is dependent on receiving an inheritance. This is even true for 20 percent of baby boomers, many of whom are facing retirement, 36 percent of Gen Xers and 32 percent of millennials.

For Gen Z, today’s youngest generation (ages 18-22), this number jumps to 63 percent, despite a strong majority (87 percent) describing their approach to financial decisions as “do-it-myself.” In fact, Gen Z is most likely to rely on financial assistance from their parents (32 percent, compared to 19 percent nationally), grandparents (17 percent, compared to 6 percent nationally) and friends (17 percent, compared to 4 percent nationally).

These findings come from the latest Merrill Edge Report, which finds that uncertainty about the future is creating an unexpected dependence on others for financial security. Merrill Edge releases this biannual report to take an in-depth look at the financial concerns and priorities of mass affluent Americans.

“We’ve never seen such a strong reliance on receiving an inheritance,” said Aron Levine, head of Merrill Edge. “With shifting priorities and growing lifespans, Americans are finding new ways to ensure their financial stability and are increasingly looking to others. While it’s great to see investors thinking ahead, the key to financial freedom is outlining and following an action plan for short- and long-term goals beyond an inheritance — which may or may not ever come.”

The survey of more than 1,000 mass affluent Americans also shows that beyond an inheritance, respondents are becoming more likely to rely on input from others than their own instincts when making major life decisions, such as investing money (36 percent) and retiring (22 percent).

Merrill Edge is committed to empowering its clients and helping them plan for their financial futures, whether that’s with the help of an advisor, through online channels or some combination of both.

Conscious investing on the rise, but profits are most important

While Americans are most likely to describe the stock market as “volatile” (34 percent), it doesn’t appear to be deterring them from investing. Most Americans (57 percent) say they made money in the stock market in the past year. Seniors (68 percent) and Gen Xers (67 percent) cite the most financial gains, with Gen Z at 54 percent.

Investors are also prioritizing social investments1 and community welfare. When choosing investments, Americans say they are more likely to invest in companies that:

  • Pay women and men equally (87 percent).
  • Promote diverse senior leadership (85 percent).
  • Demonstrate a commitment to environmental sustainability (82 percent).
  • Provide three or more months of family leave (78 percent).
  • Support the LGBTQ community (61 percent).
  • Share their religious beliefs (62 percent).

But Americans still value financial gains over social values, as they are most likely to invest in stock based on market performance (88 percent), closely followed by its ability to pay dividends (85 percent).

Further, 60 percent of respondents say they would be more likely to invest in a profitable company whose values they disagree with than a struggling company whose values they agree with (40 percent), as well as the most profitable company regardless of its sector (57 percent) over a company with a focus on environmental assets (43 percent).

The future of financial guidance is a hybrid of high tech and high touch

According to the report, emerging technologies are also drastically shaping the future, particularly where, how and when investors seek financial guidance. In fact, one in five respondents is more likely to rely on digital than in-person advice, and 69 percent of Americans believe all financial decisions will be made with the help of technology in their lifetime.

Forty percent of respondents are already comfortable consulting artificial intelligence (AI) for financial guidance. In fact, many would trust AI to provide spending and saving guidance (45 percent) and make investments (32 percent) – higher than the number of Americans who would trust the technology to drive a car (28 percent), post to social media (28 percent) or select a wardrobe (26 percent) for them.

Despite investors embracing technology, in-person advice is still king. When it comes to making financial decisions, 81 percent of Americans are most likely to turn to a financial adviser over their closest confidants, including wealthiest friends (70 percent), older generations (69 percent), and even finance apps (50 percent).

“While we’re seeing rapid adoption of emerging technologies, investors truly want the best of both worlds – digital and physical – when it comes to decision-making, not one or the other,” said Levine. “That’s why we take a high-tech and high-touch approach to innovation at Merrill Edge, continuing to invest in new technologies and solutions to meet clients where they are and help them plan for their financial futures throughout their lifetime.”

Merrill Edge Survey Methodology

Convergys (an independent market research company) conducted a nationally representative, panel-sample online survey on behalf of Merrill Edge April 9-20, 2018. The survey consisted of 1,000 mass affluent respondents throughout the U.S. Respondents in the study were defined as aged 18 to 40 (Gen Z/millennials) with investable assets between $50,000 and $250,000 or those aged 18 to 40 who have investable assets between $20,000 and $50,000 with an annual income of at least $50,000; or aged 41-plus with investable assets between $50,000 and $250,000. For this purpose, investable assets consist of the value of all cash, savings, mutual funds, CDs, IRAs, stocks, bonds and all other types of investments such as a 401(k), 403(B), and Roth IRA, but excluding primary home and other real estate investments. We conducted an oversampling of 300 mass affluents in Atlanta. The margin of error is +/- 3.1 percent for the national sample and about +/- 5.6 percent for the oversample market, reported at a 95 percent confidence level.

Merrill Edge

Merrill Edge is a streamlined investment service that provides access to the investment insights of Merrill Lynch and the convenience of Bank of America banking. With Merrill Edge, clients can view their Merrill Edge investment and Bank of America bank accounts on one page online. They also have access to easy-to-use tools, actionable insights, step-by-step guidance and competitive pricing for online trades.

Bank of America

Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 47 million consumer and small business relationships with approximately 4,400 retail financial centers, approximately 16,000 ATMs, and award-winning digital banking with approximately 36 million active users, including 25 million mobile users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Banking products are provided by Bank of America, N.A., and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

Merrill Edge® is available through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), and consists of the Merrill Edge Advisory Center (investment guidance) and self-directed online investing.


Reporters May Contact:

Susan Atran, Bank of America
Phone: 1.646.743.0791


Impact investing and/or environmental, social and governance (ESG) managers may take into consideration factors beyond traditional financial information to select securities, which could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. Further, ESG strategies may rely on certain values based criteria to eliminate exposures found in similar strategies or broad market benchmarks, which could also result in relative investment performance deviating.