COVID-19 has affected everyone, including the way we make financial decisions. One thing that has remained unchanged through all of this is our desire to protect ourselves and those we care about — both physically and financially. But every financial professional also knows that emotions can have a large influence in their clients’ financial decisions.
A fascinating new survey from New York Life has detailed how the COVID-19 pandemic has affected the emotions of American consumers, along with how this relates to financial confidence, behavior, and differences between generations.
Americans Feel Worried and Scared — And Also Loved
This shouldn’t surprise anyone, but according to the New York Life survey, the emotion adults in the U.S. have been feeling most strongly is worry, reported by almost 70% of respondents. But it’s not all doom and gloom — nearly just as many respondents also said they’re feeling loved. Similarly more than half of people said they feel scared, but this is balanced out by about the same amount who say they’ve felt reflective during this period.
People are reporting a lot of negative feelings, but for most, there are mixed emotion. Nearly the same amount of positive feelings were reported as negative ones.
Financial confidence and general optimism are intertwined, according to the survey results. Fifty six percent of those who said they feel hopeful about the future were also confident their retirement savings will last for the rest of their lives. On the other hand, only 44% of those surveyed who reported negative emotions felt the same about their retirement savings.
It may be difficult to separate correlation and causation here, but it seems safe to say those who feel financially well-prepared for the future are more likely to feel optimistic than those who don’t. For financial advisors, working with their clients on retirement planning could help to dissipate some of the their clients’ negative emotions.
Confidence in Financial and Retirement Plans
Many people are still confident about their long-term retirement plans, but they’re not quite as confident as they were. Boomers (age 56–74) are less confident than younger generations, with over half reporting that they feel less confident due to recent news. Boomers also feel less confident about their economic outlook over the next year than younger generations.
But taking a longer view, Boomers are more confident about their retirement savings than younger generations. One of the key reasons why Boomers are confident is that they are more likely to have a retirement plan in place. According to the New York Life report, more than half of Boomers said they had a retirement plan in place, compared to 45% of Gen-X (age 40–55) and less than a third (31%) of Millennials (age 24–39).
Dylan Huang, Senior Vice President and Head of Retail Annuities at New York Life, noted that younger people shouldn’t worry too much about not having much in retirement savings yet. “The lesson isn’t in how much you’ve set aside,” Huang said. “It’s in following Boomers’ lead in being diligent about planning and deliberate about how you save, use and budget your money.”
Americans Know They Need to Update Their Financial Plans
When asked whether their financial plans were prepared for the recent unprecedented market volatility, over 70% of respondents said they were not and they know their plans need to be adjusted. And yet despite those numbers, only about half of people said they are likely to re-evaluate their current financial plans or create a new one, and only about a quarter of respondents said recent events have made them more likely to seek out expert advise to help revise their financial plans.
“Despite being in a virtual environment, human guidance remains a critically important piece of ensuring financial plans can weather any situation,” said Aaron Ball, Senior Vice President and Head of Insurance Solutions at New York Life. “Connecting with a qualified financial advisor can help ensure Americans have enough protection for today and tomorrow.”
People Most Likely to Seek Out Financial Advisors and Financial Planners
Generationally, younger Millennials (age 24–31) were the most likely to express a likelihood to use a financial professional to update their financial plans, while Boomers reported being the least likely. Of older Millennials (age 32–39) and Gen-Z, about 40% are likely to seek assistance from financial professionals.
On the emotional spectrum, respondents to the New York Life survey who reported feeling angry were most likely to seek assistance from a financial professional, along with those feeling sad, scared, and reflective.
Financial Professionals Should Reach Out to Their Clients
Due to recent events, most Americans know they should update their financial plans, but many are reluctant to do so. This gives financial advisors and financial planners an opportunity to be proactive and reach out to their clients now.
And WebCE offers courses that can help! We have courses for Certified Financial Planners (CFPs) and designations from The American College of Financial Services — including multi-credit courses that can cover CE/CPE for multiple certifications and designations. A few of our courses to help you while reaching out to your clients include:
- Financial Planning for Today's Consumer, which focuses on what financial planners and financial advisors need to know when helping clients develop a sound financial plan.
- Senior Needs Planning, which covers the unique needs of senior clients and the specific areas that are of concern to them-income planning, healthcare planning, estate distribution, and more.
- Principles of Wealth Management, which considers the important financial issues faced by all people but felt most acutely by individuals nearing retirement, including maintaining one's lifestyle, protecting assets, and transferring maximum assets to the next generation.
To order courses, visit our course catalog below or call our customer service representatives at 877-488-9308.
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