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Cents and Sensibility Schwab Survey Finds That Americans Define Wealth in Very Different Ways

Nachrichtenquelle: Business Wire (engl.)
21.06.2017, 15:00  |  322   |   |   

Americans are split on their definitions of wealth, according to new research from Charles Schwab, with some describing wealth as a specific sum of money and others describing it more as a state of mind.

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On a scale of 1-100, Americans received an average Modern Wealth Index score of 49. Among the four f ...

On a scale of 1-100, Americans received an average Modern Wealth Index score of 49. Among the four factors of the Index, Americans score highest when it comes to confidence in reaching their goals, while staying on track was the largest drag on the overall index score. (Graphic: Business Wire)

When asked to define wealth, the top five sentiments among 1,000 Americans are:

  1. Having a lot of money (27 percent)
  2. Enjoying life’s experiences (24 percent)
  3. Being able to afford anything they want (22 percent)
  4. Living stress-free and having peace of mind (19 percent)
  5. Having loving relationships with family and friends (12 percent)

When asked to express how much is required to be considered “wealthy” in America, survey respondents say it’s an average of $2.4 million, or nearly 30 times the actual median net worth of U.S. households according to the U.S. Census Bureau.¹

However, when asked to compare two opposing ideas of wealth at a more personal level, Americans lean into things that money can’t buy:

  • Sixty-five percent equate wealth with having good physical health vs. having lots of money (35 percent)
  • Fifty-eight percent say wealth is about having gratitude vs. having money (42 percent)
  • Fifty-six percent believe wealth is about building community vs. working on one’s career (44 percent)

“Wealth is often thought of as a lofty, unattainable number that doesn’t apply to most of us, but that’s an old-fashioned notion that needs to be retired,” said Terri Kallsen, executive vice president and head of Schwab Investor Services. “It doesn’t matter whether you have a lot or a little—what matters is that you think about the money you have as your wealth, and that you pay attention to it. Being engaged is the only way to reach your personal goals.”

“Not every investment firm is built to encourage this level of engagement across investors of all types and sizes. We’ve watched as many firms set their account minimums high and their fees higher, making it difficult for people to access professional planning and advice,” said Kallsen. “As Americans’ definition of wealth evolves, the industry needs to modernize its approach to find new ways to deliver good value and a great experience to a broader population.”

Introducing the Modern Wealth Index

To help track how well Americans across the wealth spectrum are planning, managing and engaging with their wealth, Schwab developed the Modern Wealth Index. The Index, which is grounded in Schwab’s Investing Principles, assesses Americans across four factors: 1) goal setting and financial planning, 2) saving and investing, 3) staying on track, and 4) confidence in reaching financial goals.

On a scale of 1-100, Americans received an average Modern Wealth Index score of 49. Among the four factors of the Index, Americans score highest when it comes to confidence in reaching their goals, while the actions it takes to stay on track—such as checking account balances and rebalancing investments—was the largest drag on the overall index score.

“With an average score of 49, we’re seeing people fall near the midpoint of the index, which means they’re doing some things well but there’s also some room for improvement,” said Kallsen.

 
Average Modern Wealth Index score: 49

Goal setting and

financial planning

      Saving and investing       Staying on track      

Confidence in reaching

financial goals

43       52       24       64

Overall and sub-factors scores are each on a scale of 1-100.

 

Written financial plans unlock positive behavior

According to the Index, those who put pen to paper with written financial plans are more confident, more engaged with their wealth and demonstrate more positive saving and investing behaviors than average Americans, scoring above the national overall index average of 49 with a score of 79. They also score above the national average across all four sub factors of the index:

  1. Goal setting and financial planning: 100
  2. Saving and investing: 67
  3. Staying on track: 46
  4. Confidence in reaching financial goals: 100

There is also significant difference in specific behaviors when comparing those with a written plan to those without:

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