Concerns about the economy, fear of a recession, and high levels of personal debt are causing many Americans to feel as if they must make difficult choices, according to a survey by Thrivent. This had led to the need for “purpose-based” financial advice that helps people make choices aligned with their personal values.
Quite a few Americans believe that drastically increasing their income is a way to bring their financial decisions in closer alignment with their values, the Thrivent 2023 Financial Crossroads Survey pointed out. In fact, 42% of the respondents said they’d need 21-60% more income to bring their financial decisions closer to their values, and 22% said they’d need 61-100% more.
The survey found that Americans would prioritize:
Taking a job where they are working harder and longer hours to make and save more (53%) over making less but having more free time to do what they love (47%)
Saving for their children’s college (56%) over saving for their own retirement (44%)
Investing bonus money for the future (73%) over splurging on a vacation (27%)
Saving for their own retirement (75%) over funding their parents’ extended care (25%)
Furthermore, many Americans would choose to pay off their debt (42%) if they were to receive a large sum of money unexpectedly. In fact, these options far outweighed the other choices presented to them, including investing for the future (22%), making home improvements (6%), traveling and experiences (5%), or donating to a charity (3%).
“Many people expect this period of financial uncertainty to continue, and their fears could be getting in the way of making financial decisions that reflect their intention and values,” said Loren Hansen, vice president of Thrivent Advisor Groups.
“Increasingly, we’re seeing a need for purpose-based financial advice that helps people manage their money in the present and allows them to consistently connect those decisions to their main purpose and guiding values,” Hansen said.
Defining purpose-based financial advice
So, what is purpose-based financial advice? Thrivent’s purpose-based financial advice approach is built on the idea that money is a tool, not a goal, said Hansen. “We start with our clients’ goals and values, then work with them to develop a financial plan. The result for our clients is a highly personalized and actionable financial plan that is guided by their purpose and values at the center.”
Purpose-based financial advice has several benefits. For financial advisors, Hansen said, offering purpose-based advice sets the foundation for a long and meaningful relationship with clients in which they feel supported at every stage of their financial journey. And for clients, she added, “a holistic financial plan helps them achieve greater financial clarity and confidence.”
Advisors can take several steps to successfully use purpose-based financial advice with their clients. According to Hansen, they can:
Start with the relationship. Financial planning at its best is built on a relationship between the financial advisor and his or her client. “Work with your client to discover their unique values and goals, then use that as the basis for developing thoughtful financial strategies to include in their plan,” Hansen said.
Spend time connecting and discovering. “You can’t put a meaningful and actionable financial plan together without understanding what drives your clients. Spend time connecting with your clients and discovering what you can about their financial picture. Financial strategies come together naturally once you have a deep understanding of your clients,” Hansen pointed out.
Be an accountability partner. Good financial plans are never one and done, Hansen said. “Purpose-based advice is about delivering a great plan, then reviewing and adapting the strategies when life changes, tracking progress, and aligning a client’s financial decisions back to their values.”
The survey’s findings reveal a huge opportunity to help people through purpose-based financial advice, the survey said. While today’s economic environment presents many challenges, a financial advisor can help people take meaningful steps to connect their financial decisions to their values. This important relationship sets the stage for having thoughtful conversations about what matters the most to people throughout their lives, tying it back to specific goals, and executing a financial plan that keeps those values at the center.
Morning Consult partnered with Thrivent on the survey, which was designed to understand how people prioritize their values in their financial decisions. The survey, conducted in June 2023, asked 2,500 adults about their personal values, financial decisions, and financial-management tactics.
Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.
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