With inflation resurgent, the cost of living has topped the list of American worries, according to a new survey by the Certified Financial Planner Board of Standards, the organization responsible for wealth management’s most popular designation.
“These past several years have not been easy for Americans,” Kevin R. Keller, CEO of the CFP Board CEO, said in a statement. “CFP professionals are uniquely positioned to meet this demand and help American consumers navigate uncertainty while prioritizing their short- and long-term financial goals.”
For this survey, the CFP Board, as it’s commonly known, polled 944 adults in February 2023 – the majority of whom have worked with a financial advisor – and found that nine in 10 Americans are concerned about the cost of living, with their concerns ranging from rent to inflation and their ability to purchase necessities like food and clothing.
Financial advisors are uniquely positioned to help Americans deal with financial worries. Past surveys have shown that investors who work with financial advisors are less stressed than those who don’t and that financial advisors have a positive impact on overall investor confidence when compared to those without an advisor.
Financial planning is also a core part of an advisor’s job and something that many Americans find overwhelming to do on their own. Knowing what concerns Americans have can help advisors serve their clients better.
The survey found that 63 percent of Americans are concerned with purchasing necessities such as food, their job security (56 percent), paying their rent or mortgage (55 percent), saving money (82 percent), and the national economy (82 percent). Starting a family (26 percent) and paying off student debt (31 percent) were the least concerning topics. The majority of respondents also said national economic issues such as the cost of living and inflation were concerning for their finances.
Income as well as age played a part in responses. Top concerns for those making above $100,000 were the national economy and their investments. People making under $100,000 also said their top concerns included the national economy, but their current savings/emergency funds and sticking to a budget outweighed worries over their investments. More than 80 percent of both groups were concerned about the ability to save money. Those over 45 and older were more concerned about savings compared to younger adults (86 percent versus 78 percent).
Younger Americans were also more likely to make decisions that could impact them negatively long term. Investors under 45 were more likely to delay credit card payments (29 percent versus 17 percent) and delay loan payments (25 percent versus 16 percent). Both age brackets were equally as likely to withdraw money from retirement accounts (24 percent for those under 45 and 23 percent for those 45 and above).
“Those actions could have negative consequences,” The CFP Board wrote. “Younger consumers could benefit from financial advice to avoid these types of actions.”
If financial advisors are aware of what their clients are concerned, they can help alleviate financial stress by creating targeted plans and keep their clients from making decisions that have long-term negative effects.