The financial industry is changing rapidly, and in some surprising ways, as more consumers turn to alternative sources for financial advice and information.
According to a recent survey by Vericast, a leading marketing solutions company, nearly half of consumers seek financial advice from friends or family, while less than a third seek advice from a bank or financial advisor.
Of those seeking advice from non-traditional sources, 34% of Gen Z consumers obtain financial advice from TikTok, while only 24% seek advice from financial advisors.
The survey, which polled 1,000 adults in the US, also found that consumers have evolving expectations of financial institutions, particularly during times of financial instability.
Seventy-nine percent of respondents expect flexibility on rates and fees, such as waiving overdraft or late fees, while 66% expect it to be easier to obtain new lines of credit.
An additional 69% said notifications about lines of credit available to them, and promotions on special rate offers are also expected.
To retain customers and meet evolving expectations, financial institutions must innovate quickly and reimagine their approach, said Stephenie Williams, VP/financial institution marketing product and strategy at Vericast. She added:
“Banks and credit unions need to meet customers where they are, not only positioning themselves as a go-to, trusted resource providing education through traditional strategies, but also using new channels and platforms to reach younger generations.”
Amount of Bank Savings Impact Metal Well-Being
The survey also found a correlation between mental well-being and banking, as 75% of consumers said the amount of money in their bank account impacts their mental health.
For this reason, almost half of the respondents said they are prioritizing building their savings accounts in 2022.
When choosing a financial institution, 61% of consumers cited mobile banking capabilities as one of the top factors influencing their decision, followed by better interest rates (66%) and incentives to open an account, such as a cash reward for signing up (66%).
Two-thirds of respondents also said that fewer fees would incentivize switching financial institutions.
Building up savings (48%), paying off debt (47%), and investing directly in stocks (21%) are top financial priorities for consumers in 2022. Less of a priority for consumers is opening a new checking account (12%) or credit card (19%).
Despite declining interest in some traditional financial products, there are still opportunities for financial institutions to generate business as nearly half of respondents (42%) are planning to buy a car in 2022, while 34% are planning to remodel their homes.
Why Do Investors Change Their Financial Advisors?
Investors often change their financial advisors due to a variety of reasons.
Some may seek better performance from their investments or want a more comprehensive financial plan tailored to their specific goals, while others may feel dissatisfied with their advisor’s level of communication or attention given to their account.
Another common reason for switching advisors is due to a lack of trust, whether through poor recommendations or a breach of confidentiality.
Additionally, life changes such as marriage, divorce, or inheritance may prompt a need for a different type of advisor with expertise in a certain area.
According to a 2021 survey from Statista, 53% of investors said their primary reason for switching from their current financial advisor was due to “better investment performance” with another firm.
Another 42% of respondents said they switch financial advisors to access a broader range of products. Cost factors such as monetary fees and aligning investments with personal values and culture had less influence over survey participants when choosing to switch financial advisors.
Meanwhile, in 2022, Rothschild & Co was the leading financial advisor to global merger and acquisition deals with 411 mergers and acquisitions (M&A) transactions.
Major American banks including Goldman Sachs, JPMorgan, and Morgan Stanely were the next three biggest financial advisors last year, each with 393, 360, and 285 M&A transactions, respectively.
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