Strategies To Lead Your Clients Forward Again
by Christian Mitchell
Mr. Mitchell is executive vice president and chief customer officer at Northwestern Mutual, responsible for the company’s planning philosophy and experience, consumer insights and experience strategy, and the development of digital tools and processes to deliver a distinctive client experience throughout a client’s journey. He serves on Northwestern Mutual’s Senior Leadership Team and sits on Northwestern Mutual’s Future Ventures investment committee. Visit: northwesternmutual.com
The COVID-19 pandemic has brought change at an unprecedented scale, impacting lives, economies, and societies around the globe. It is a unique moment in history, and one where millions of people are facing financial challenges that would have seemed remote just a few months ago. That is a call to action for financial advisors. It is a time to work side by side with clients to help them recover and get back on track toward financial security.
Every American today is adjusting to a new normal, focused first on trying to stabilize the worlds around them. In addition to concerns about their families’ health and safety, people are dealing with questions about job security, financial losses, and paying their bills. Many have experienced significant interruptions to their financial plans.
The advisor community has a responsibility to be there for clients in difficult moments when they are needed most. It is also important for advisors to understand that times of crisis, while difficult, can represent a catalyst for positive change.
Adapting To The Pandemic
The pandemic has devastated labor markets and disrupted the ways in which we work and interact with one another. A recent study by the National Bureau of Economic Research found that of those employed pre-COVID-19, about half are now working from home. Companies are also increasingly considering permanent work-from-home policies.
Advisors must be cognizant of the shifting dynamics of the workplace and the U.S. workforce at large to adapt to the constraints of the new normal. The challenges of the work-from-home environment have placed an emphasis on the need to streamline the digital experience of their practices. Many firms are turning to frequent digital touchpoints to enhance communications and are increasingly using technology to share and sign documentation.
Even virtually, the human connection of an advisor in these most extraordinary times can help ease the financial anxiety and emotional loads of clients. Firms that are able to effectively institute seamless digital experiences, complemented by a human connection, are poised to build deeper client relationships.
Understanding The Financial Realities Of Americans
Advisors need to have a firm understanding of the financial realities people face today. It is through a shared understanding that we will be in the best position to help lay the groundwork for recovery. And that understanding comes in many forms, from direct client conversations to study data and more.
Northwestern Mutual’s annual Planning & Progress Study examined how the pandemic has impacted Americans’ decision-making and behaviors, and found that almost half (45%) have had to take steps to cover their regular living expenses.
Of those who took action:
- 25% dipped into personal savings or emergency funds (excluding retirement accounts)
- 14% borrowed money from family or friend
- 10% dipped into retirement account/savings (e.g., 401k, IRA, etc.)
Many Americans have also re-evaluated their spending habits, and hit pause on some big decisions:
- 23% have postponed large purchases or projects (e.g., car purchase, home remodeling, etc.)
- 15% have postponed changing jobs/searching for a new job
- 11% have postponed buying or building a new home
Additionally, many Americans are approaching their finances more cautiously than before the pandemic – 42% say they’re less willing to take risks in an effort to protect their assets.
Reasons For Optimism
In times of hardship, the value of a good advisor is perhaps most clear. Advisors who respond accordingly to the moment by offering tailored, actionable advice and a seamless client experience stand to benefit from their proactivity.
Encouragingly, there is an appetite among Americans for financial advice. The 2020 Planning & Progress Study found that 16% of Americans didn’t have an advisor before the pandemic but will seek to start working with one moving forward.
The study also found that the younger generations stand out for how they have taken initiative in response to the economic downturn:
- Nearly three out of 10 (28%) Millennials have revisited their financial plans and made significant adjustments, more than any other generation.
- About one-fifth of each Gen X (19%), Millennials (22%) and Gen Z (22%) didn’t have a financial advisor before the pandemic but will seek to start working with one now.
Advisors should find hope in the fact that the economic downturn is prompting Americans to think about their long-term financial planning. At the same time, the call to action is for their own practices to grow and adapt as well. We are in a unique position to showcase our value to people today by helping them build stronger financial foundations – ones that can weather the storm and endure. The time to answer the call is now.