PARK RIDGE, Ill.--(BUSINESS WIRE)--2020 was a year of chaotic change in America: the COVID-19 pandemic, an adjustment to work-from-home life, a resulting recession 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 said their top 2021 New Year’s resolution would be related to their finances. As 2021 continues, consumers may find that partnering with a financial advisor will give them the confidence they need to reach their goals and achieve financial freedom.
Changes in household income
Even taking government aid into account, more than a third (35%) of Americans say their household income decreased in 2020. This broad drop in income will likely 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 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 also 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%).
“After a tumultuous 2020, consumers entered 2021 in a multitude of financial situations, leaving many in a race against time to recover lost ground,” said MDRT President Ian Green, Dip PFS. “No matter how they began the year, consumers stand to benefit from having conversations with financial professionals to restore or reinforce their post-COVID-19 financial future.”
Moving forward in 2021
2020 was a financial learning experience for most Americans, with 83% saying they learned at least one financial lesson last year. The top three lessons learned in 2020 included the importance of having an emergency fund (52%), paying down debt (36%) and discussing finances with others (29%).
Many Americans are ready to ask for help with applying those lessons to their personal finances. 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 some of the groups hit hardest, including 54% of 18-to-34-year-olds, 58% of 35-to-44-year-olds and 60% of Hispanic Americans.
“For consumers looking to reconfigure their finances, financial professionals can offer extensive knowledge that eases the process and opens up options a consumer may not have considered or even been aware of by themselves,” said MDRT First Vice President Randy L. Scritchfield, CFP, LUTCF. “Seeking a long-term partnership with a financial advisor can be a difficult process, so consumers should work with an advisor from a credible association like MDRT to resolve today’s financial issues and keep future goals within reach.”
Consumers will bring financial advisors a diverse range of monetary goals and priorities. When asked what they would like to work with a financial advisor on in 2021, 30% of those without an advisor named identifying and preparing for long-term financial goals as the top action item. Help 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. As consumers work to build savings, pay down debt and prepare for long-term needs, a financial advisor may be their ideal partner in their endeavors.
To learn more about these findings, visit the MDRT Media Room.
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. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Carrie Kaniecki.
Founded in 1927, Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals®, is a global, independent association of more than 65,000 of the world's leading life insurance and financial services professionals from more than 500 companies in 70 nations and territories. MDRT members demonstrate exceptional professional knowledge, strict ethical conduct and outstanding client service. MDRT membership is recognized internationally as the standard of excellence in the life insurance and financial services business. For more information, please visit mdrt.org and follow them on Twitter @MDRtweet.
The Million Dollar Round Table (MDRT) is committed to celebrating and serving its inclusive, diverse constituency of members in a culture where everyone is valued, respected, appreciated and treated fairly without bias or discrimination. As a global organization, MDRT values and embraces the differences among its members. MDRT will purposefully establish and promote policies, programs and procedures that affirm diversity, equity and inclusion for the benefit of all members, aspiring members, industry partners and the financial services profession.