Amid the economic uncertainty caused by COVID-19, a new study shows that many Americans plan to hold firm with their long-term investments, but many are also seeking out a financial advisor for the first time ever.
Findings from a Nationwide Retirement Institute survey of more than 2,000 American adults conducted in April 2020 show that nearly a quarter of respondents (24%) and a subset of investors (26%) for the first time are engaging a financial advisor as a result of the pandemic. The subset includes over 600 U.S. investors with investable assets of $100,000 or more.
“Right now, Americans feel a lack of control and a need for more guidance,” says Kristi Rodriguez, leader of the Nationwide Retirement Institute. Rodriguez explains that even if investors do all the right things to manage their finances and investments, the vast majority—including 80% of all respondents and 85% of investors—agree they can still be blindsided by outside events. “According to 49% of respondents and 52% of investors, the COVID-19 pandemic made them realize that they need help managing their finances and investments to succeed in the future,” she notes.
Investment Views
Nationwide also found that even as the pandemic affects immediate financial needs, many Americans say they are staying the course with their long-term investments. When managing their qualified retirement savings plans—such as their 401(k), 403(b), 457 and IRA in response to COVID-19—nearly half of all respondents and investors say they will make no change and stay the course (42% vs. 50%, respectively).
If making changes to their qualified plans, respondents and investors are somewhat more likely to move to a more conservative allocation (14% and 19%, respectively) and somewhat less likely to move to a more aggressive allocation (10% and 15%). Nationwide also found, however, that respondents overall are less likely than the subset of investors to increase contributions (10% vs. 16%) but also somewhat less likely to decrease contributions (10% vs. 14%).
When managing their other investments in response to COVID-19, many respondents and investors also say they will make no change and stay the course (35% and 42%).
If impacted by COVID-19, respondents overall were found to be somewhat less likely than the subset of investors to meet financial obligations by selling shares in qualified retirement plans (10% vs 16%). Nationwide observes that this may, in part, reflect that nearly 2 in 10 respondents (18%) don’t have a qualified retirement savings plan, whereas only 4% of investor respondents do not.
Respondents overall, according to Nationwide, are somewhat more likely than the subset of investors to need other sources such as delaying paying bills (24% vs. 19%, respectively), relying on one-time payment from the stimulus package (22% vs. 15%), relying on help from family and friends (19% vs 15%) and relying on unemployment insurance (13% vs 10%).
Trusted Sources and Access
Advisors top the list of trusted sources for general financial and money management advice during the pandemic. All respondents say their top choices include:
- a financial advisor (37%);
- friends and family (29%);
- online investment management/financial planning tools (20%); and
- their employer-sponsored retirement plan (20%).
As for whether they already have an advisor, less than a third of respondents (31%) said they do have one, compared to more than half of investors (58%). In addition, more than a third of respondents (35%) and nearly half of investors (49%) say they are now relying on a financial advisor more than ever due to the impact of the COVID-19 pandemic.
A separate study by Hearts & Wallets found that investor demand for more access, in more ways, to financial services has been growing—and that was even before COVID-19 caused call volumes to spike. Their study finds that consumer demand for access across multiple touchpoints is growing, with mobile apps making the biggest jump.
Nationally, customers place growing importance on “has good mobile apps,” up 7 percentage points. The next largest year-over-year spikes are in:
- quality of online tools and research;
- local branch office is easy to get to; and
- quality of internet account access.
Of the 26% of households nationally who consider mobile apps very important, 63% of them also place high importance on local branches. Apps do not displace human interactions, as 91% of consumers who place high importance on mobile apps also say being “easily reachable by telephone” is very important.
“Omni-channel access has been growing in importance, even before the spike in COVID-19-related calls,” notes Laura Varas, CEO and founder of Hearts & Wallets. “Mobile apps are an additional channel, rather than a substitute for phone or branch accessibility, and offering multiple ways to connect is even more important during this time of crisis when consumers seek reassurance.”
Nationwide’s survey was conducted online within the U.S. between April 8-10, 2020, among 2,042 adults (aged 18 and over) by The Harris Poll on behalf of Nationwide. This sample included 603 investors defined as those adults with investable assets of $100,000 or more.
The Hearts & Wallet survey data was fielded in July 2019 among 5,461 households.
