MDRT Study of a Client/Advisor Relationship and Interest Rates

A recent study conducted by MDRT reveals that although the majority (85 percent) of Americans say they are somewhat or very confident in their financial skills, only 55 percent of Americans without an advisor feel at least moderately comfortable explaining the implications of higher interest rates compared to 76 percent of Americans with a financial advisor.

Overall, 60 percent feel at least moderately comfortable explaining the implications of higher Federal interest rates to others. While many survey respondents do not have financial advisors (73 percent), 67 percent of these consumers believe working with one would increase their understanding of interest rate implications. Two thirds (66 percent) of survey respondents who have a financial advisor say that working with their advisor has increased their understanding of interest rate hikes.

“While interest rate hikes can have both positive and negative effects, it is important that advisors communicate how these changes will affect clients’ short and long-term financial plans,” said Ross Vanderwolf, CFP, MDRT President. “Financial advisors have the opportunity to leverage current events to encourage strong financial literacy among their clients as they educate and help them prepare to reach financial goals.”

When asked about perceptions of pending interest rate hikes, consumers had mixed responses. If the Federal Reserve raises interest rates, almost a third (32 percent) believe it will negatively affect their finances, and another 39 percent said it will both positively and negatively affect their finances. Just 12 percent said it will positively affect their finances, and 17 percent said it would not affect them. Younger Americans ages 18-29 are more likely (42 percent) to state that higher interest rates will negatively affect their finances compared to Americans ages 29 and older.

Of those respondents who have a financial advisor, over half (53 percent) state that their advisor helped set up their portfolio to prepare for higher interest rates. When all respondents were asked about actions they would take if the Federal Reserve raises interest rates again in the near future, 27 percent of respondents said they plan to change at least one aspect of their financial plan, 26 percent plan to talk with a financial advisor and 41 percent will monitor the impact through news coverage.

Survey Methodology: The survey was conducted by G&S Business Communications on behalf of MDRT. G&S conducted an online snap poll of 530 consumers in the United States ages 18+. The survey was conducted on August 28, 2018, following news suggesting the Federal Reserve would increase interest rates again.

About
Latest Posts

Franz Reiter

Senior Editor at Producers eSource

Franz Reiter is the Senior Editor for Producers eSource; the industry leading online publication for actionable and informative content for insurance and financial services professionals. He can be reached at franz@insurancemediaservices.com.