Hidden in the statistics and surveys about investing in a world with COVID-19 is a trend towards trusting financial advisors. To borrow a phrase from John Krasinski, “You are the good news.”
The news comes fast and furious these days. Vaccines are launching. Jobs are coming or going. And in the middle of all of that, it can be hard to distill what is important or what’s worthy of your attention. John Krasinski, of the hit TV show The Office, created a the YouTube web series during the coronavirus pandemic to focus entirely on positive and inspiring stories called Some Good News. It was a massive hit. So massive that in just eight weeks his YouTube show gathered 71 million views and 2.57 million subscribers on YouTube.[1] On his last episode, Krasinski closed by reminding viewers “I only deliver the good news. You are the good news,” explaining that resiliency and strength is found in always looking for the good news. Some Good News’ popularity shows that buried in all of the news of the pandemic might be some glimmers of good news, even for financial advisors.
Some financial news outlets have reported that the volatility in the market in April created the largest daily price swings since 1929.[2] That volatility, for the most part, has driven the news cycle and inspired concern in some investors. Some investors. But not all.
In fact, a recent survey showed that many of those who received a check through the CARES Act saved it. “Despite nearly 20% saying they had been furloughed, laid off or otherwise separated from their job, the most popular answer among survey respondents was to sock their money away, with 38% saying they put it into savings.”[3] And those that are saving it, may be investing it.
Axios reported recently that hidden in the numbers on investing and the stock market was a potential golden ticket. According to Axios, “Thanks to zero fees, easy access afforded by the internet, and an unexpected glut of free time on their hands, millennials and Gen Z are opening online brokerage accounts at a record pace…. TD Ameritrade reported a record 608,000 new funded accounts in the first quarter and more than three times the number of users in March compared to March 2019.”[4] Many of those visiting investment companies’ websites are there for the education. In fact, as we mentioned in a recent newsletter, “surveys are showing that many of those seeking out financial advisors are new to working with an advisor or haven’t sought individual advice before.”[5]
The rising number of folks looking for guidance from financial advisors isn’t solely due to the pandemic. As reported in March of 2020 “In a survey of over 2,000 U.S. adults — including 1,213 who have investment accounts — commissioned by NerdWallet and conducted online by The Harris Poll, we asked Americans how they manage their investments, how they feel about using human financial advisors and/or robo-advisors, and what concerns they have about using a robo-advisor.”[6]
The results may surprise you. “More than 2 in 5 Americans who have investment accounts (44%) use a human financial advisor to manage these accounts, while less than 1 in 5 (15%) use a robo-advisor…. The majority of Americans who don’t use a human advisor to manage their investments (65%) say they would hire a human advisor to manage them if they could afford to.”
Those numbers should surprise you, as confidence in financial institutions back in 2008 and 2010 was not nearly as rosy. According to a General Social Survey “the proportion of people with hardly any confidence in banks and financial institutions doubling from 21% in 2008 to 41% in 2010.” And in 2016, surveys showed that “…65% of respondents said they mistrust the financial services industry to some degree.”[7] That attitude has changed. It may be because of the change in the market with gains leading up to the COVID-19 crisis. But it could also be because of the discussion of the role of fiduciaries. One other reason could be because of how financial advisors view themselves. “Several current and former advisors and industry executives are running for local, state and federal posts. The crop of candidates in the midterms doesn’t represent so much a wave as a longtime trend of civic participation.”[8] In other words, advisors view themselves as part of their community.
Hidden in the statistics and surveys about investing in a world with COVID-19 is a trend towards trusting financial advisors. To borrow a phrase from John Krasinski, “You are the good news.”
[1] https://www.usatoday.com/story/entertainment/celebrities/2020/05/22/john-krasinski-sells-some-good-news-cbs-fans-call-him-sellout/5247315002/
[2] https://www.marketwatch.com/story/stock-market-investors-have-to-go-back-to-1929-to-find-daily-swings-this-wild-2020-04-07
[3] https://www.axios.com/americans-to-save-not-spend-stimulus-checks-bb84737a-a924-4613-a471-169a07942da1.html
[4] https://www.axios.com/coronavirus-stock-market-millennials-gen-z-190eda7b-66a3-4e19-9f44-8dd0dd23f0a4.html
[5] https://www.bcgbenefits.com/blog/new-clients
[6] https://www.nerdwallet.com/blog/investing/robo-advisor-survey/
[7] https://www.fool.com/retirement/2017/07/11/most-americans-dont-trust-their-financial-advisors.aspx
[8] https://www.financial-planning.com/news/why-financial-advisors-are-running-in-the-midterms
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