By Cyril Tuohy
With a new year around the corner, financial advisors may want to think about tweaking their business models. Could $250 be the new $2,500? Maybe, according to one consumer financial trends expert. At the very least, the idea is worth exploring.
“Consumers do see value in having a conversation with another human about finances but they don’t want to pay for it,” said Katie Libbe, vice president of consumer insights for Allianz Life Insurance Co. of North America in Minneapolis.
Many advisors have heard that complaint before and have contemplated lowering their fees, but coming down as low as $250? Libbe says that it may be time for a dramatically different approach. “I just think financial advisors could benefit thinking about their service model,” Libbe said in an interview with InsuranceNewsNet.
Allianz plans to explore advisors’ business models in more depth next year, particularly as the company’s latest survey on the financial planning habits of consumers shows that the spending discipline exhibited by consumers isn’t “maturing” into financial planning, Libbe said.
Thegood news from the fifth annual Allianz Life New Year's Resolution Surveyis thatcompared with last year'ssurvey,fewer respondents said they are not saving enough. There’s also been a decrease in spending on goods and services survey respondents say they don’t need, Libbe said.
The bad news for advisors as well as consumers is that that hasn’t really translated into more financial planning.
Given the economic conditions of 2013 and their financial situation, 32 percent were less likely to seek advice from a financial professional, 19 percent said they were more likely to seek such advice, and 49 percent were unsure, the survey found. Blame the roaring stock market and the housing market gains for that.
Respondents mean well, though. Asked what New Year’s resolutions survey respondents were mostly likely to make a keep in 2014, a total of 43 percent said exercise and dieting, 40 percent said managing money better, and 30 percent said spending more time with friends and family, the survey also found.
With better money management near the top of the list, there’s an opening for advisors to step in and get the conversation going. But advisors need to position themselves as true financial advisors who can add value by helping clients look at a global view of the household “portfolio,” — children, taxes, in-laws, rainy-day funds, education, short, medium and long-term planning.
For advisors who can get the conversation started for $250, there’s a resolution that consumers may find worth keeping.
Cyril Tuohy Profile">Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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