Pandemic-related financial gains may fade: Northwestern Mutual Survey
This year, for example, 22% of survey participants said they started reducing or paying off their debt because of the pandemic and expect to continue this behavior for the long term.
The percentage of plan members who said they have paid off their debts and expect to continue to do so is down from 34% in 2021.
Similarly, the percentage of those who said they had made and would continue to make efforts to reduce spending fell to 35%, from 45%, and the percentage of those who said they expected to invest more increased fell to 19% from 33%.
The advisor’s point of view
Aaron Bell, a life insurance agent, investment analyst and investment adviser at Cannataro Family Capital Partners, part of Northwestern Mutual’s private client group, said he has worked for two years to encourage clients to use the extra time they have at home to put their finances in order.
Bell said he sent many to personal finance education sites, encouraged them to pay off existing debt and avoid taking on new debt, and helped some realign debt they still had. .
“Anything with an interest rate is a priority,” Bell said.
In some cases, he said, he was able to help clients replace higher-rate student loan debt with lower-rate debt.
Bell has also tried to warn customers that investment markets can go down as well as up, to lock in some gains, when gains have emerged, and to help customers understand financial basics, such as their related benefits. employment, and whether they receive matching 401(k) contributions from their employers.
“It’s a marathon,” Bell said, “It’s never fast.”
The role of insurance
For many new finance professionals, the thought of being told, “List 100 people you know and try to sell them life insurance” can seem terrifying.
But Mitchell and Bell noted that, for new financial professionals, who may never have been adults in a prolonged bear market, selling life insurance is a relatively easy financial services task.
Talking about life insurance, disability insurance and related products is important to client well-being, generates stable premium income for Northwestern Mutual, can generate stable commission income for the finance professional – and is much easier for a new finance professional than persuading clients to entrust the management of their savings to a new finance professional, Mitchell and Bell agreed.
Pictured: Christian Mitchel (Photo: Northwestern Mutual)