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It’s human nature to assume that wealth is measured in amounts of assets and one’s net worth. Said another way, the typical desire of many people is to reach millionaire status because that’s what they associate with financial success.
Maybe it’s the result of persistent inflation and high interest rates or simply growing tired of measuring self-worth by material means or other factors, but views on wealth are changing. Obviously, that’s an issue for advisors to focus on and it can provide some relief in the form of not having to tell some clients it’s unlikely they’ll ever be millionaires.
While many clients might not join the millionaire club and plenty seem to be eschewing notions of Italian sports cars in the driveway and beachfront property, that doesn’t imply desires are eliminated. Rather, advisors need to be nimble and allow their views to shift with those of their clients.
Fortunately, much of what clients are seeking these days boils down to a simple word: Comfort. For many clients, when realizing entry into the seven-figure net worth club isn’t likely, they opt for comfort –a solid alternative in its own right. In fact, advisors may be surprised by the extent to which clients have become rational and are prioritizing comfort.
Comfort: It’s a Big Deal
Advisors looking for context on the issue of clients craving comfort should consider the findings in a new Bankrate survey.
“To consider themselves financially successful, Americans most commonly say they’d need to be living comfortably (56 percent), financially prepared for the future (44 percent), never worrying about money (41 percent) and living debt-free (41 percent),” notes Bankrate. “Those picks were more popular than having enough money to quit working (19 percent), being a millionaire (13 percent) and owning a business (11 percent), among others. Respondents could select up to three choices to define what success looks like to them.”
Something else advisors need to acknowledge is the point that while many clients have altered their views on wealth and comfort, they want the tools and empowerment to realize their goals and they’re far from throwing in the towel simply because they won’t be multi-millionaires. Advisors can help fill those voids.
“Of the Americans who haven’t yet achieved their version of financial success, more than half (53 percent) say the path there involves making more money. Nearly half (49 percent) need to grow their savings, more than a third need to pay down debt (34 percent) and 3 in 10 feel they need to invest more (30 percent),” adds Bankrate.
Understanding Financial Comfort
As noted above, there varying components to financial comfort or feeling financially free. Those include being rid of debt, not having to worry about finances and being prepared for the future. Accomplishing those objectives isn’t reserved for millionaires and clients appear to know as much because becoming a millionaire ranks sixth on the Bankrate list of how respondents define financial success.
What is almost universal (and practical) is the point that those that don’t view themselves as financially successful, but are yearning to get there know something has to change. Advisors can be forces for those positive changes.
“Slightly less than half (49 percent) say they would need to grow their savings, more than a third (34 percent) would need to pay down debt and 30 percent say they need to invest more. Meanwhile, 26 percent say they need to stick to a budget and 13 percent would need to take on more responsibilities at work or work longer hours,” concludes Bankrate.