When it comes to personal finance, our attitude may matter as much as our assets, according to research by Western & Southern Financial Group.
Andrea Clark, Western & Southern AVP of experience strategy, introduced the research to attendees at the virtual Society of Insurance Research 2020 Annual Conference this month. For her conference session, she was joined by two representatives from Ipsos, a global market and opinion research company that partnered with Western & Southern on the research study.
“Considering Americans’ relationship to finances in terms of their attitudes and beliefs should be an aha moment for the financial services industry,” said Clark. “We’ve always thought of people in terms of life events and demographics, but our research tells us that there’s another layer that we haven’t been thinking about.”
The study, titled Financial Attitudes of the U.S., explores Americans’ attitudes and behaviors in relationship to their personal finances, and reveals that age and income alone do not dictate an individual’s motivations. Americans fall into one of six financial segments, each reflecting a different perspective toward financial services, products and guidance:
• Prideful Explorers
25% of the U.S. population.
45% have a financial representative.
37% plan to hire a financial representative.
Prideful explorers are engaged in their finances and optimistic about their future. Exploring new and uncharted territory is exciting to them, even with their finances.
• Thoughtful Planners
19% of the U.S. population.
40% have a financial representative.
20% plan to hire a financial representative.
Thoughtful planners want to be in control when it comes to their personal finances. They follow a plan, make lists and are on top of their finances and many other aspects of their lives. They are highly engaged in their finances, which is driven by their desire to limit life’s surprises.
• Active Providers
18% of the U.S. population.
17% have a financial representative.
25% plan to hire a financial representative.
Providing for their family is the active provider’s top priority. This style extends into their personal finances and their strong desire for financial security. They are focused on being able to pay the monthly bills and eventually gaining control of their debt.
• Advice Seekers
17% of the U.S. population.
45% have a financial representative.
37% plan to hire a financial representative.
Advice seekers are all about relationships and having a trusted partner in their finances. They are on top of their personal finances and are knowledgeable, but they like to have someone help with decision-making.
• Enthusiastic Investor
12% of the U.S. population.
47% have a financial representative.
10% plan to hire a financial representative.
Enthusiastic investors are passionate about finances and confident that the decisions they make will positively impact their future. Enthusiastic investors limit their purchases, so they can save for that retirement they can't stop dreaming about. They could be considered financial hobbyists and enjoy researching financial topics.
• Joyful Spender
9% of the U.S. population.
41% have a financial representative.
13% plan to hire a financial representative.
Joyful spenders are all about getting the most out of life and enjoying all that they can. This segment prefers a set-it-and-forget-it mentality when it comes to their finances. They probably don’t follow a financial plan "to a T," but they do care about their finances and are motivated to maintain their lifestyle.
45% have a financial representative.
37% plan to hire a financial representative.
Prideful explorers are engaged in their finances and optimistic about their future. Exploring new and uncharted territory is exciting to them, even with their finances.
• Thoughtful Planners
19% of the U.S. population.
40% have a financial representative.
20% plan to hire a financial representative.
Thoughtful planners want to be in control when it comes to their personal finances. They follow a plan, make lists and are on top of their finances and many other aspects of their lives. They are highly engaged in their finances, which is driven by their desire to limit life’s surprises.
• Active Providers
18% of the U.S. population.
17% have a financial representative.
25% plan to hire a financial representative.
Providing for their family is the active provider’s top priority. This style extends into their personal finances and their strong desire for financial security. They are focused on being able to pay the monthly bills and eventually gaining control of their debt.
• Advice Seekers
17% of the U.S. population.
45% have a financial representative.
37% plan to hire a financial representative.
Advice seekers are all about relationships and having a trusted partner in their finances. They are on top of their personal finances and are knowledgeable, but they like to have someone help with decision-making.
• Enthusiastic Investor
12% of the U.S. population.
47% have a financial representative.
10% plan to hire a financial representative.
Enthusiastic investors are passionate about finances and confident that the decisions they make will positively impact their future. Enthusiastic investors limit their purchases, so they can save for that retirement they can't stop dreaming about. They could be considered financial hobbyists and enjoy researching financial topics.
• Joyful Spender
9% of the U.S. population.
41% have a financial representative.
13% plan to hire a financial representative.
Joyful spenders are all about getting the most out of life and enjoying all that they can. This segment prefers a set-it-and-forget-it mentality when it comes to their finances. They probably don’t follow a financial plan "to a T," but they do care about their finances and are motivated to maintain their lifestyle.
Clark explained to conference attendees how the research is being used to help financial representatives improve their relationships with clients. Clients can take the Financial Style Quiz to learn which financial style they are and share their results with their advisor, enabling financial representatives to get to know new or existing clients in a different way.
Clark also touched on how the pandemic has affected consumer behavior, noting that preferences related to financial management are shifting, especially among boomers who are now more than twice as likely to prefer managing finances online.
