MDRT takes a global look at public opinion on a variety of financial issues

To help its members improve their client-service abilities, MDRT recently coordinated a series of public opinion surveys in the U.S., Japan, South Korea, Mainland China, Hong Kong, and Taiwan. The survey investigated consumer opinions of various financial issues, including trust in financial advisors, personal finance, and insurance and investments.

Across most of the regions surveyed, the majority of consumers indicated that they place at least some trust in human financial advisors, the survey said. Especially in a more digital, less face-to-face world, trust remains the bedrock of any advisor-client relationship and it’s important that consumers not only trust their own advisors, but also the profession as a whole. The U.S., Mainland China, Hong Kong and Taiwan recorded higher levels of trust in human advisors than in other surveyed areas.

Emergency savings

Respondents across the surveyed regions also reported vastly different amounts of savings they have racked up for an emergency. Although both the U.S. and Japan have wealthy, developed economies, 52% of Japanese consumers have enough emergency savings to last a year without income, compared to only 21% of U.S. consumers. In all surveyed regions, older respondents generally had more emergency savings than younger respondents, reflecting their decades of saving for retirement and old age.

Insurance and investments

In the area of insurance, large majorities of respondents across age, racial and gender lines in the U.S., Mainland China, Hong Kong and Taiwan believe that life insurance is a worthwhile insurance product for those who can afford it. In all four regions, more than 7 in 10 consumers overall believe that life insurance is worthwhile.

Across surveyed regions, stocks are the most popular investment product (separate from insurance products) among consumers but are less popular than life insurance. While stocks are easily accessible to members of the general public in all surveyed regions, the results show that there is much work to be done by financial services professionals in convincing consumers that stocks are a key part of a long-term financial plan, the survey said. Fifty percent of U.S. consumers believe that stocks are worthwhile for those who can afford them. However, there is a very large gender gap, with 59% of men believing stocks are worthwhile, compared with only 41% of women.

Addressing the challenges in the U.S.

MDRT member Julianne Hertel, a financial advisor with Dream Big Wealth Strategies, recently shared her insights on some of the challenges identified in the survey’s findings and what her firm is doing to address them.

In the personal finance area, Hertel pointed out that according to the survey, nearly half (48%) of Americans said that they only have enough savings to support themselves for three months or less, and only 33% said that they can support themselves for at least six months.
“We have a number of clients who come to meet with us and don’t have much savings to fall back on,” Hertel said. “For many of our clients, they have money in their 401k plans, and their home is worth a decent amount. But none of that money is accessible. One of the firm’s first priorities is to make sure that they have access to cash in the event of an emergency – and that should be at least three to six months of expenses safe in the bank.”

This is crucial, Hertel added. “For too many people, an unexpected accident, a car expense, or loss of job could blow up all of the other planning that they are doing. Our RIA gave us access to a high-yield savings account that we can use with our clients to help them save. Before that, we used money market accounts. But in both cases, we set up savings that we could also track alongside of them. We can both encourage them and hold them accountable for this saving,” she added.

Improving advisor trust

Hertel also pointed out that according to the survey, 69% of Americans have at least some trust in financial advisors, with 27% of Americans having a lot of trust in them.

It is disappointing that only about a quarter of Americans have a lot of trust in financial advisors, she said. “Think about what we do – we help our clients plan for the rest of their lives, we make sure that their families are protected should tragedy strike, we celebrate with them and hold their hands when life is going great, and we hold their hands when life throws curveballs at them. This is the time for us to show our best selves to them so that more Americans believe in the work that we do.”

Hertel added that all of their planning clients have Annual Planning Meetings in January and Mid-Year Update Meetings in July. “We do a market review, check on the status of their goals and dreams on our financial planning software, and discuss opportunities for them to consider. Between regular, consistent check-ins, and phenomenal planning software, we can bring tremendous value to our clients.”

 

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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