The Million Dollar Round Table recently conducted the Generational Financial Confidence Study to explore current consumers’ attitudes about financial planning during the recent financial downturn. The study concluded that there is an immediate opportunity for advisors to meet the needs of more than 35,000,000 Gen X and younger Boomers who do not currently have a financial advisor but would use one if he or she could give them confidence about their financial or retirement plan and be trustworthy.
“Consumers of all generations have lived through the financial challenges of the past two years,” said Matt Thornhill, president of the MDRT’s Boomer Project. “So it comes as no surprise that trust and confidence are their biggest concerns about financial planning. Advisors who demonstrate they understand the different priorities consumers in each generation have will achieve success even now in the midst of the ‘Great Recession.’”
The MDRT Generational Financial Confidence Study represents the views of more than 1,800 adults of all generations, with an annual household income of more than $50,000 and an interest in having a financial or retirement plan. Key takeaways from the study can be broken down to what advisors should know consumers are thinking and what to do about it.
- Today’s clients and prospects are ready to talk about plans and planning.
- There is a "new normal" for financial thinking.
- The future is with Gen X and younger Boomers, age 30 to mid-50s.
- The most important attribute is “trust.”
- Know you serve different roles for different generations.
- Understand how clients today respond to your sales tactics.
- Focus today’s calls on “confidence” issues.
- Understand how behavior is not yet matching thinking.
- Make sure you really know your younger Gen X and Boomer clients.
- Those who rebuild trust fastest will win.
- Talk about “investments” with older clients, and “making money” with younger clients.
- Use an approach based on honesty, knowledge and straight-forward advice.
Rebuilding Trust and Confidence
“There is a “new normal” for financial thinking and it is important we, as financial advisors, understand what that means to consumers,” said Julian Good, first vice president of MDRT. “This study helps us understand why a lot of people are not acting like they are thinking. This is particularly evident with younger generations who seem to have financial literacy issues, which we can help address.”
The study concluded that less than 50% of Gen Y, Gen X and younger Boomers have confidence in their financial futures. And more than 85% of them now say it is harder to trust professionals they talk with about financial matters than five years ago.
Although consumers will not be an easy sell, advisors may find people today more receptive to the idea of a financial plan because of the economy. Specifically, almost 90% of consumers surveyed of all ages say they are ready to talk about financial planning, and many do not have an advisor and even those with one may not be confident in their plan. In addition, fewer than one half of young adults are confident in their financial futures and even those Boomers and Gen Xers with plans in place now lack confidence – only 65% of Boomers with a plan feel confident about their futures.
Those with a financial advisor tend to trust them more than those without one, but overall, women trust financial advisors more than men. Advisors should tailor their approach accordingly.
“Bottom line, the MDRT Generational Financial Confidence Study is a real eye opener about the immediate and significant opportunities available to advisors,” Mr. Good said. “We’re working in a different world than existed two years ago. Advisors wanting to understand the new ‘normal way’ of thinking and help rebuild confidence and trust with consumers will find this study the cornerstone to their success this year.”