MDRT Survey: Americans Ready To Prioritize Finances

2020 was a year of chaotic change in America: the COVID-19 pandemic, its resulting recession, an adjustment to work-from-home life and more. After a year of re-learning and reflection, Americans want to take advantage of the new year by making intentional changes to their personal finances.

A recent study of more than 2,000 U.S. adults, conducted online by The Harris Poll on behalf of MDRT, found that 53% of Americans say their top New Year’s resolution was going to be related to their finances. As American society faces an undetermined future, financial advisors have a new opportunity to boost services for existing clients and prove their value to financially underserved consumers.

Household Income Impacts

Even taking government aid into account, more than a third (35%) of Americans say their household income decreased in 2020. More specifically, 37% of Americans who do not work with a financial advisor and 32% of Americans who do saw their household income decrease in 2020.

On the other hand, 28% of Americans with financial advisors say their household income increased in 2020, compared to 15% of Americans without advisors. This may indicate that financial advisors made a real difference in protecting their clients’ income and ability to meet financial goals last year, even as the recession and unemployment took their toll on the country.

“Following a tumultuous year, consumers entered 2021 in a multitude of financial situations, but financial advisors may have helped shield their clients from the worst of the damage,” said MDRT President Ian Green, Dip PFS. “In the new year, advisors must not only continue to protect clients, but help them make desired financial changes to meet their needs and meet this moment in history."

The events of 2020 seem set to reverberate for years to come, as 57% of Americans say the COVID-19 pandemic and current ongoing recession will have long-term, negative impacts on their ability to save for important life goals. Younger Americans have borne the brunt of these challenges more so than some of their older counterparts, with 62% of 18-to-34-year-olds and 67% of 35-to-44-year-olds predicting long-term difficulties, compared to just 43% of those aged 65+.

The effects of this recession have fallen unevenly on different racial groups, hitting Hispanic Americans especially hard. Sixty-six percent of Hispanics report long-term negative financial impacts from the COVID-19 pandemic and ongoing recession, compared to 53% of white Americans. Hispanics (44%) are also more likely to have reported a drop in household income in 2020 compared to their white peers (32%).

Moving Forward In 2021

Many Americans are ready to ask for financial assistance. Forty-four percent of Americans without financial advisors say the major events of 2020 in the U.S. and their financial impacts have made them realize the benefits of working with one. This includes the groups hit hardest, including 54% of 18-to-34-year-olds, 58% of 35-to-44-year-olds and 60% of Hispanic Americans.

“After the events of last year, American advisors have a great opportunity to both strengthen existing relationships and better engage with new and underserved markets,” said MDRT First Vice President Randy L. Scritchfield, CFP, LUTCF. “Staying attuned to societal, political and economic changes will always be a make-or-break skill in our industry, and this moment gives advisors the chance to separate themselves from the pack.”

A New Opportunity

Advisors will have plenty of work on their hands, as Americans have a diverse set of monetary goals and priorities. Both Americans with advisors (33%) and Americans without an advisor (30%) named identifying and preparing for long-term financial goals as their top priority in working with a financial advisor in 2021. For Americans with advisors, purchasing financial products, like annuities or insurance (30%), and diversifying their investment portfolios (30%) follow as the next-most-important priorities. For Americans without advisors, creating an emergency savings fund (28%) and paying off debt (26%) come in at second and third, respectively.

While total recovery from the ups and downs of 2020 will take time, Americans are not waiting to react with their wallets. Continued adaptability and the ability to move with societal trends will give financial advisors ample opportunity to help Americans meet their financial needs and more.

Survey methodology: This survey was conducted online within the United States by The Harris Poll on behalf of MDRT from November 19-23, 2020, among 2,034 U.S. adults ages 18 and older, among whom 1,382 are investors (have money in investments). This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.