Less is More: Perceptions of What it Takes to be 'Wealthy' Plunge in Pandemic

By Alex Padalka July 31, 2020

Financial advisors now have a much lower net worth threshold to help their clients feel "comfortable" or even "wealthy" in light of the coronavirus crisis. But the pandemic has also likely changed how advisors and clients interact forever, according to recent surveys.

Fifty-seven percent of investors say that how they communicate with their advisors has changed amid the stay-at-home restrictions imposed during the Covid-19 pandemic, results of a survey from Broadridge Financial Solutions show. In light of the crisis, 58% of investors cite phone calls as a new preferred way to keep in touch with their advisors, while 46% cite emails and 36% cite video chat. In all, Broadridge collected data from 1,000 individuals who use a financial advisor across the U.S. and Canada. The survey was fielded in June 2020.

Meanwhile, advisors will also have to deal with new perceptions about wealth. Charles Schwab found that what Americans think the minimum net worth a person needs to feel "comfortable" or "wealthy" has fallen sharply during the Covid-19 pandemic.

In January, Americans believed being "comfortable" required $934,000. By June, that figure had dropped nearly 30% to $665,000, according to Schwab. The surveys each included 1,000 Americans aged 21 to 75. The first survey was conducted from January 9 to January 16 while the second survey was fielded between June 25 and July 2.

Schwab also found that the net worth Americans believe is sufficient to feel wealthy dropped from $2.6 million in January to $2 million in June — a 23% plunge.

Advisors will need to play a bigger role in helping clients manage stress: Schwab’s survey found that Americans are almost 15% more financially stressed today compared to the end of 2019. 

Americans have become more serious about their finances, too: 24% of respondents to Schwab’s survey say they’re now more likely to have a financial plan. And while around 30% of respondents say they’re skittish about investing, 19% say they’re now more likely to invest in the stock market and 22% say they’re more likely to start investing, Schwab found. 

However, advisors will also need to make further inroads with their current clients if they want to win new ones. In Broadridge’s survey, 44% of respondents say their advisor has never communicated with their spouse, partner, children, grandchildren or heir. At the same time, 44% of respondents say they found their financial advisor thanks to a personal referral, Broadridge found. 

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