40% of Consumers Decreasing Their Retirement Investment Right Now Plan to Switch Firms in the Next Three Months

Over the last few months, the U.S. economy has taken a big hit. With record-high unemployment and so much uncertainty surrounding the “new normal”, it’s no surprise all of this chaos has presented financial challenges for consumers. Account-holders are dealing with everything from loans and refinancing to 401K withdrawals and unemployment.

This air of uncertainty is unsettling for millions of people who’ve been planning for their financial future with investments and retirement funds. Consumers may not have the luxury of putting away money for their future if they’re unemployed or struggling to make ends meet in the present. So, who is decreasing their retirement fund and other investments during this time? It’s essential that account holders see their wealth management firms as a trustworthy resource to help them make tough financial decisions they may not equipped to make on their own.

The best way to do this is to gain a deeper, dynamic understanding of account holders and their sentiment surrounding COVID-19 so wealth management marketers can adjust their messaging, offers, communication and engagement strategy in a way that makes consumers feel safer and more secure.

Consumers Who Are Decreasing Their Retirement Investment

This group of nearly 27 million consumers is mostly made up of married women ages 55-64 with an annual household income between $25-50K. When it comes to their top personal values, they over-index for caring for nature, obeying laws and fulfilling obligations and accepting those who are different. This group emphasizes fulfilling their obligations, so it makes sense that in a time of so much uncertainty, this group would want to make sure their obligations at the moment are taken care of, especially if they have dependents. Planning for the future could take a backseat during this time.

What are their investment firm preferences and behaviors?

This segment is 249% more likely than the average U.S. consumer to have a retirement account sponsored by their employer. The segment with an employer-sponsored retirement plan is more likely to have an account with Vanguard or Fidelity. Those looking to decrease their investments are also 238% more likely to have an account with their bank and 177% more likely to have one with their investment advisor/broker.

Customers with employer-sponsored retirement accounts are more likely to have less than $10K in their retirement fund, while those with a non-employer-sponsored account are more likely to have over $3 million. These differences make sense as those with an employer-sponsored account are likely reliant on an income in order to put money away for retirement, which may be temporarily suspended or cut during the pandemic.

This group is also 64% more likely to contribute to a 529 plan, which makes sense as this group is 17% more likely than the average consumer to have a child go away to college within the next year.

Another notable insight, according to Resonate’s proprietary data, is that those who are decreasing their retirement investment are 40% more likely than the average consumer to plan on switching investment accounts within the next three months. Specifically, the firms they’re considering switching to are Merrill Lynch, TD Ameritrade and Charles Schwab.

So, how do you ensure that your account holders aren’t one of these consumers thinking of switching to another firm? Or, if you’re one of the firms they’re thinking of switching to, how do you connect and engage with these on-the-fence account holders?

When it comes to choosing an investment advisor, this group is 226% more likely to prefer someone who is part of an independent local business, 153% more likely to prefer someone who offers excellent customer service and 149% more likely to prefer someone who provides objective advice. Highlighting the resources your firm offers and positioning yourself as trustworthy and reliable will go a long way with this group.

When it comes to their relationship with their investment account advisor, they’re 569% more likely to bring their own ideas, hear recommendations and ultimately make their own decision. They’re also 275% more likely to hear an advisor’s ideas and decide on the best approach together and 198% more likely to almost always follow the advisor’s recommendations.

What Does This Mean for Investment Firms During the COVID-19 Crisis?

Based on what we’ve discovered about this audience in the Ignite Platform, this group skews older and needs to put their plans for their financial future on the back burner throughout this time of uncertainty surrounding the economy and job stability.

This group is focused on fulfilling their obligations, so investment advisors should provide recommendations on how they can make ends meet now, while also still planning for their future. They also value objective advice and good customer service, so keep them from jumping ship by empathizing with their situation and giving them useful advice they can use during their stressful financial situation.

Want to learn more about consumers during the COVID-19 crisis? Download our one-of-a-kind report: Understanding U.S. Consumer Sentiment During the Coronavirus Pandemic.