As insurers scramble to bolster their own bottom lines as the economy slowly rebuilds, one of the ways in which they're finding success is by improving their customer service offerings in an effort to enhance the end-user experience. While this strategy seems to be paying off—as seen in a report today from Watermark Consulting—what happens if this all-valuable resource still doesn’t have the money to purchase their products?
Financial Finesse, a financial education provider, released its 2009 findings on consumer financial trends, and the results show that consumers, on the whole, are only doing marginally better off than they were one year prior.
The report, which analyzed direct calls to the company’s helpline, and online data from employees at more than 300 employers across the country, concluded that recovery for customers is tepid at best.
Debt vs. Savings
Debt calls decreased from 39% of calls in Q4 2008 to 35% of calls in Q4 2009, to which the firm points as a slight sign that consumers overall are beginning to recover. Additionally, Financial Finesse found increasing signs that consumers are making financial decisions that will benefit themselves and the economy in the long run—namely, continuing to cut costs, reduce debts and increase savings. Budgeting and savings calls increased from 25% in Q4 2008 to 34% in Q4 2009, and as 2009 progressed, an increasing number of employees reported that they are paying off their credit card debt.
In previous years, debt calls significantly outnumbered budget calls, often at a two-to-one ratio. The fact that they are now close to parity, the firm says, means that consumers are dramatically shifting their attitude towards their money and the way they manage it to become more responsible consumers, savers and investors.
"Instead of becoming victims of the crisis, they are using it as an opportunity to get their financial house in order—recognizing that they can’t control the swings in the market or the actions of their employers, but they can control how they spend, save and invest their money," the report says.
However, other data revealed consumers are not yet out of the woods. Retirement planning calls remained unchanged from Q4 2008 to Q4 2009, the survey found, holding at 8% of total calls, and there was a decline in most other proactive financial planning calls as consumers focused instead on managing their day-to-day finances in response to the crisis.
Financial Responsibility By Gender
One telling piece of data shows that from Jan. 1, 2009 to April 30, 2009, Financial Finesse received more than double the number of calls to its financial help line from women (68%) as men (32%).
According to the company, women tended to be more reactive than proactive about their finances than their male counterparts:
• 43% of calls from women were regarding debt, with half of those relating to strategies to reduce debt. (36% of calls from men were regarding debt)
• 29% of the debt related calls from women were regarding serious debt issues such as: “How can I avoid foreclosure?”, “How can I avoid bankruptcy?”, and “What are the pros and cons of taking a loan from my retirement plan?"
• 21% of calls from women to the financial helpline related to budgeting and saving compared to 34% of the calls from men.
A recent survey of defined contribution plan participants conducted by MassMutual's Retirement Services Division reveals some similar results regarding male and female financial planning strategies.
Based on online survey of more than 1,000 of its retirement plan participants between Nov. 15, 2009 and Jan. 15, 2010, the insurer found that women were significantly less confident in making their own investment decisions (32.5%) compared to men (47.8%). Likewise, more men enjoyed managing their investments (61.5%) than do women (48.1%). More women also preferred spending as little time as possible on investment decisions (39.3%) compared to men (28%). While, overall, 70.9% of participants enjoyed learning about investments compared to 8.2% who don't, a higher percentage of men (75.4%) enjoyed learning as opposed to women (63.1%).
In terms of approach to retirement planning in the current economy,
40.3% of total respondents reported becoming more conservative, while 32.9% became more aggressive and 26.8% had not changed their approach.
Additionally, MassMutual found that just 10.2% of surveyed participants currently work with a personal financial advisor. However, the percentage (30.0%) of participants who were more likely to seek help from an advisor as a result of the recession was more than double the percentage who were less likely (12.7%), with the remainder no more or less likely to seek help than before. Women were almost 25% more likely to already work with an advisor than men (11.9% vs. 9.6%) and were almost 20% more likely than men to seek help as a result of the recent economy (34.1% vs. 28.8%).
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access