Wells Fargo has just come out with a new survey about the health of American adults. The good news is that most Americans feel that they’re in good or great shape physically (this may ease some concerns about health care costs), but the bad news is that less than half feel the same about being financially healthy.
However the news isn’t all bad. As the report states, “Most Americans feel in ‘good/great’ financial health” when it comes to paying their monthly bills (67%), providing for their family (56%) and their overall standard of living (53%).
Alas, their ‘financial health’ deteriorates when you look at their ability to retire comfortably (only 33% see that as being possible) or even having a ‘rainy day’ savings available (only 40% have that). So it isn’t surprising that half of all Americans report being worried about their financial future.
So when you’re not feeling physically healthy, you go to a doctor. In fact, three quarters of Americans report going to a doctor for a yearly physical check up and 74% go to the dentist (I believe the number is lower for those who actually floss).
Karen Wimbish, director of Retail Retirement at Wells Fargo, says, “I think of personal finance in the same vein as my health — I wouldn’t keep concerns about my physical health private. I’d consult a doctor or talk to a friend or family member about it.”
What do you do when you’re not feeling financially healthy?
I believe that attitude is a major contributor to one’s health, whether it’s financial or physical. In the survey, you see similar thinking as most adults reported that they are more stressed about their current financial situation than they were last year (39%) and that money issues represent their biggest source of stress in their life (39%). A third of Americans felt that their financial health is a bigger concern than their physical health!
With this much stress, Americans need someone to talk to.
According to the survey, fewer than half of Americans (43%) had conducted a financial review or checkup in the last year. However, the survey also reveals that nearly half of those surveyed (49%) believe that they would benefit from a financial professional or investment adviser.
What’s interesting is that this was especially true among younger adults aged 25 to 39 (55%). This seems to go against the thinking that the youth of today is a “do-it-yourself,” tech savvy population who doesn’t have a need for the Wall Street adviser of their parents?
As I’ve written here in the past, that seems to be the thinking of many Wall Street firms and older advisers who cater to their aging client bases while sending those smaller (in terms of assets) and younger clients to call centers and self directed online accounts.
The majority of commissions and fees come from high net worth and typically, older clients. But when they pass on, those assets go out the door and off the books of financial advisers and their firms.
A key message from this survey for the financial industry and advisers is that people of all ages want and need you.
As many of you know, I believe that adult children and their retiring or retired parents should have “the Talk” to help with later life issues, including finances. Although most people will say that this is necessary, it isn’t often easy to do as most parents today avoid financial discussions with their children. Findings from this survey also prove that.
In fact, the Wells Fargo survey finds that “seventy-one percent of adults surveyed learned the importance of saving from their own parents. Despite this, only a third (36%) of today’s parents report discussing the importance of saving money with their children on a frequent basis, with 64% indicating that they talk about savings with their kids less than weekly or never.”
The study also reveals that Americans can’t even talk to their spouses or partners about money and finances — one third of Americans report that it’s difficult to do that and they’d rather discuss politics or religion than personal finances. It also shows that women find it more difficult to discuss personal finances with others (50% versus 38% of men). This may be in line with studies that show that when the male client dies, 50% of the time, the adviser loses the assets and accounts as the female spouse seeks someone who will (finally) listen to them.
To me, this survey from Wells Fargo shows that although Americans of all ages may know how to improve their own physical health, they need professional help when it comes to improving their overall financial health.
So if it’s so tough to discuss finances within the family and people are so concerned with their financial well being, where can that professional help come from?
It’s a tougher job than it’s ever been, but it’s one for the financial adviser. In conversations I’ve had with advisers, many tell me that they often feel more like a psychiatrist than a financial adviser. Improving one’s health, whether financial or physical can often require a change in attitude, or how one views their situation.
For the adviser it may require that all the discussions about yield curves, asset allocation and quarterly performance take a back seat to discussions about the hopes, dreams and goals of clients. Ms. Wimbish of Wells Fargo believes that “advisers should first be looking at a clients’ hopes and dreams before they provide advice.”
Questions like “what do you want your retirement to look like?” or “what type of legacy do you want to provide?” need to replace “would you like more bonds in your portfolio?” or “how do you feel about alternative investments?”
As a “leading voice” in American business, Mad Men’s Don Draper once said, “if you don’t like what’s being said, change the conversation.”
Many advisers are doing that today through techniques such as involving the retiring or retired clients along with their adult children in expanded discussions that go beyond just finances, to include issues such as health, wellness, attitude and involvement that will play a major role in one’s later life.
But most advisers avoid these types of discussions as they don’t typically lead to immediate commissions and it often takes them out of their comfort zones. What they also avoid by doing this is the ability to connect with the younger investors and even, the “other spouse,” and this ultimately can lead to assets walking out the door.
These are discussions that focus the conversation on what is really important to a client and their family, and not just on how much wealth they have, but why they have it and what they want to accomplish with it. Those are the issues that lead one to feeling financially healthy.
This will require advisers to become better versed in listening to, and discussing the larger concerns of their clients and their families, than just being focused on performance, asset allocation and the one client in the family that they talk to.
But those who do that will be the advisers who survive and thrive into the future and perhaps, be the people that help America feel financially healthy again.