Money and Wellbeing by the Numbers: How Happy Are Your Clients?

A financial advisor may keep the doctor away. Two new studies show that financial advisors may play an important role in worker’s sense of well-being. Blackrock recently conducted a massive study of individuals connection between wealth and well-being. Their survey of 27,000 people across 13 international markets is one of the largest on this topic conducted by anyone.  You can find it here: https://www.blackrock.com/sg/en/literature/publication/global-investor-pulse-sg-brochure-en-2018.pdf
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One interesting takeaway from the Blackrock study is that the actual act of investing for the future has a positive impact on an individual’s current perception of their well-being. And yet, 57% of those who responded were not investing. Of those who don’t invest, 60% said they didn’t have enough money to start investing. Also troubling, 64% of those who don’t invest, according to the 2018 Blackrock study, said they find investment information confusing or hard to understand.

Here’s the good news from this study: those who aren’t investing want to try, despite their current hesitations. Of those polled in the United States, 34% of those who aren’t investing want to try with smaller amounts.  And the better news for financial advisors? 76% of those who use a financial advisor have a positive sense of well-being. That’s true across the three major generations (Baby Boomers, Gen X, and Millenials). It also hold true across men and women (with men at a slightly higher percentage of 77 to women’s slightly lower percentage of 74).  Advisors can use this study to talk to potential clients about what might be holding them back about their investing. It can also be a great way to talk to clients about how to further their sense of well-being.
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In April of 2019, the TransAmerica Center for Retirement Studies released a thorough study that covered 5,923 workers. This slightly favored Millenials over Gen X or Baby Boomers (2,156 Millennials - 1,476 Generation Xers - 1,477 Baby Boomers). Similar to the Blackrock study showing that those who invest feel happier or more secure, those studied in the TransAmerica project referred to retirement as “freedom,” “enjoyment,” and “stress-free.” This study also found that most workers did have a good sense of well-being. The study showed that more than 80% of those surveyed are generally happy, are enjoying life, and have a strong sense of purpose in life. Interestingly, the study showed that a close 80% responded that they felt confident in their ability to manage their finances, and yet other aspects of the study showed worrisome results, as with the Blackrock study.

Unfortunately, those same workers overwhelmingly responded that that people in their generation will have a much harder time achieving financial security in retirement compared with their parents’ generation, with three quarters of those surveyed responding that way. This may show an increased need for financial advisors to be more involved in helping their clients meet their financial goals.
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As to specific generations, Millenials are ahead of the game on their eagerness to dig into retirement: one fifth of them talk about savings and retirement with friends and family. Generation X, on the other hand, has a major catch up problem. The survey identified that “a concerning 32 percent of all Generation X workers have taken a loan, early withdrawal, and/or hardship withdrawal from their retirement account(s).”
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As to well-being, a finding noted in the Blackrock study, the TransAmerica study found that many workers in America plan to work in their retirement not only for additional funds, but also to provide healthy aging. Workers believe that working in retirement will keep them active and that will help them stay active.
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Unfortunately, there are some concerning points that TransAmerica found. One was that 7% of Millenials carry a payday loan. Another is that a similar 7% have taken a hardship withdrawal from their 401(k), with the top reason given being to prevent eviction (nearly 20% responding that way).  
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Of vital importance for financial advisors, the study showed that many workers feel that their retirement plans are based on guessing. “Almost half of workers who provided an estimate of their retirement savings needs indicate they guessed those needs (46 percent).” This study too lays a lot of good groundwork for advisors to understand how to better contact potential clients and help them start investing, especially as it can help with their overall sense of well-being.

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