Good Financial Habits Built During Pandemic May Be Starting to Slip: Customer Whisperer

This year, for example, 22% of the survey participants said that they have started to reduce or pay down debt because of the pandemic and expect to continue that behavior in the long term.

The percentage of participants who said they have been paying down debt and expect to continue to do so is down from 34% in 2021.

Similarly, the percentage said they have been making and would continue to make efforts to cut spending has fallen to 35%, from 45%, and the percentage who said they expected to invest more has fallen to 19%, from 33%.

The Advisor’s View

Aaron Bell, a life insurance agent, investment analyst and investment advisor with Cannataro Family Capital Partners, part of Northwestern Mutual’s private client group, said he has been working over the past two years to encourage clients to use the extra time they have at home to get their finances in order.

Bell said he has sent many to personal finance education sites, encouraged them to pay down existing debt and avoid taking on new debt, and helped some realign the debt they still have.

“Anything with an interest rate is a focus,” Bell said.

In some cases, he said, he has been able to help clients replace higher-rate student loan debt with lower-rate debt.

Bell has also been trying to warn that clients that investment markets can go down as well as up, to lock in some gains, when gains have appeared, and to help clients understand financial basics, such as what their employment-related benefits are, and whether they are getting 401(k) plan matching contributions from their employers.

“It’s a marathon,” Bell said, “It’s never quick.”

The Role of Insurance

For many new financial professionals, the idea of being told, “List 100 people you know, and try to sell them life insurance,” may seem terrifying.

But Mitchell and Bell noted that, for new financial professionals, who may have never been adults in a prolonged bear market, selling life insurance is a relatively easy financial services task.

Talking about life insurance, disability insurance and related products is important for the well-being of the clients, generates steady premium revenue for Northwestern Mutual, can generate stable commission revenue for the financial professional — and is much easier for a new financial professional than persuading clients to trust the management of their life savings to a new financial professional, Mitchell and Bell agreed.

Pictured: Christian Mitchel (Photo: Northwestern Mutual)