Pain Points

Bridging The Big Advice Gaps

When Financial Tasks Are Difficult, Consumers Don’t Seek Help

New research from Hearts & Wallets looks at key insights into consumer unmet needs to shape better products and adviceVisit here.

(October 16, 2018, Rye, NY) – The vast majority of consumers who find a financial task difficult don’t seek help, creating large advice gaps, as seen in a new report from Hearts & Wallets, the source for retail investor data and insights.

The report, Pain Points & Actions: Insights to Address Large Advice Gaps by Reaching Consumers with Unmet Needs, is  drawn from the latest fielding of the Hearts & Wallets Investor Quantitative™ Database (IQ™ Database) and reveals the most pressing pain points different groups of consumers face, the reasons they seek help, and the actions they have taken and plan to take. The IQ™ Database is recognized as the largest single dataset on U.S. retail consumer attitudes, behaviors and buying patterns with over 46,000 U.S. households.

Relating to More Tasks

Consumers, both young and old, say a range of financial tasks are more relevant to them than six years ago. For retirees and “pre-retirees,” those within five years of retirement, 14 of 16 financial tasks have relevance to three-fourths of these groups. Two of the largest increases are “knowing how to find resources to plan financially in retirement” and “developing strategy to withdraw from multiple accounts,” both up 9 percentage points since 2012.

“Accumulators,” or consumers still focused on working and saving, say 11 of 14 financial tasks are relevant to 90 percent this group, with the largest increases seen in “choosing investments” and “handling market volatility emotionally,” both up 11 percentage points since 2012.

Bridging the Gap

“Choosing appropriate investments” is a top pain point for all consumers, including over half (57%) of accumulators, 43% of pre-retirees, and nearly a quarter (24%) of retirees. A large majority of other financial tasks are reported as difficult by both younger and older consumers – from “knowing how to find resources to improve my ability to plan financially in retirement” to “managing the finances of my loved ones as they age,” which is more difficult for consumers ages 21 to 52.

Consumers get confused or default to inertia because they don’t understand which solution out of the wide range of offerings in the marketplace fits their specific needs...

“Financial tasks can be hard,” Laura Varas, CEO and founder of Hearts & Wallets said. “Consumers get confused or default to inertia because they don’t understand which solution out of the wide range of offerings in the marketplace fits their specific needs. Firms can personalize products and advice to support consumers. A framework that helps consumers to better understand their options and to make informed choices is also important.”

Seeking Help

Only 16% of accumulators who have difficulty with the retirement planning advice gap have sought help, and only 9% for “identifying what year I might stop working.” Only 11% of pre-retirees have sought help for “developing a strategy to withdraw income from multiple accounts during retirement.”

For younger consumers, ages 28 to 39, only 3 out of 14 financial tasks have rates of seeking help above 20%. The No. 1 advice gap for this group is “identifying what year I might stop working full-time.”

Taking Action

More younger consumers plan to take actions than older consumers – from changing their investment mix, buying insurance to trying a new provider. Actions taken and planned vary by firm. Customers of Scottrade (now part of TD Ameritrade NASDAQ: AMTD) at 34%, Wells Fargo (Wells Fargo NYSE: WFC) at 26%, and Citibank (Citigroup NYSE: C) at 25% are most likely to be planning to “try a new provider either with a big or small account.”

“Firms can benefit from competitive insights into the buying patterns at your firm, competitors and distributors to develop products and enhance loyalty,“ Amber Katris, Hearts & Wallets Subject Matter Expert and report co-author, said. “Key consumer insights into seeking help and taking action can lead to enhanced products and advice that solve unmet needs.”

Methodology
Pain Points & Actions: Insights to Address Large Advice Gaps by Reaching Consumers with Unmet Needs is a report drawn from the insight module in the Hearts & Wallets Investor Quantitative™ Database (IQ™ Database). The report provides a comprehensive overview of U.S. consumer pain points, the reasons they seek help, and the actions they have taken and plan to take. Timeframe for consumers seeking help was within the past 12 to 18 months as of July 2018.

 

 

About Hearts & Wallets
Hearts & Wallets is a data and consulting firm focused on understanding the drivers behind retail investor decision making. Combining a consumer marketing framework with financial services operating experience, the company is a catalyst for consumer-driven innovation in retail investing and saving. Hearts & Wallets works with leading financial providers to improve the effectiveness of their marketing communications, solution design and service delivery. For more information visit www.heartsandwallets.com.