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CFP® Professionals and Recession Preparedness

While pundits have predicted a recession that has yet to happen for several years, clients do worry about the impact to their finances if a recession occurs. According to a recent survey by CFP Board, CFP® professionals and other financial advisors make a difference in client confidence when facing recession concerns.

According to the survey, “Nearly two-thirds (65 percent) of adults working with a financial advisor said they feel more prepared now for a potential recession than they did in 2008. When looking specifically at those who work with a CFP® professional, 73 percent of respondents said they feel more prepared now than they did in 2008.

Additional survey findings include:

  • Consumers are generally optimistic - 59 percent have an optimistic view of their household or personal financial situations while 52 percent are optimistic about the future of the U.S. economy.
  • However, nearly two-thirds of adults (63 percent) are concerned about the possibility of an economic recession, with a quarter (25 percent) who said that they are very concerned.
  • Seventy-six percent said a recession would have an impact on their household, while more than a third (36 percent) said it would have a major impact.

‘When looking at these findings, it is clear many Americans are concerned about the possibility of a recession occurring within the next twelve months, but those who work with a financial advisor – and specifically a CFP® professional – have much more confidence about their finances when faced with the prospect of a recession,’ said Kevin R. Keller, CEO of CFP Board. [Mr. Keller went on to say] ‘While we will not know precisely when the next recession will occur, it is imperative that consumers feel prepared and assured in their ability to withstand the pressures of a financial downturn.’”

The results of the survey revealed three key findings:

  1. Financial advisors have made a difference in making people feel prepared.

    Adults working with a financial advisor (67 percent) are much more likely to say they would feel prepared for a recession than those who are not working with a financial advisor (38 percent).
    What’s more, 59 percent of people working with an advisor say that a recession is likely to have minor to no impact on their household and three-quarters (77 percent) said they are confident their advisor would successfully manage their finances through a recession.

  2. Women are more concerned by and feel less prepared for a recession.Sixty-eight percent of women, compared with 58 percent of men, said that they were concerned about a potential recession. When asked whether they were prepared for such an outcome, 51 percent of men replied in the affirmative, compared to only 36 percent of women – although these numbers do improve when posed to men and women who work with financial advisors. According to the survey, 77 percent of men and 58 percent of women with a financial advisor said they would feel prepared for a recession, representing 26-point and 22-point increases, respectively.
  3. Homeowners feel more prepared for the next recession.Fifty-one percent of homeowners, compared with 36 percent of non-homeowners, feel more financially prepared for a recession than they did during 2008. Overall, homeowners have much more confidence about their finances and recession preparedness than those who don’t own a home. More than two-thirds (67 percent) of homeowners feel optimistic about their personal or household financial situation, a 16-point difference from non-homeowners (51 percent).

What’s the takeaway for our clients? A CFP® professional can help you achieve your financial goals AND give you more confidence in weathering a recession as well.

The full survey may be accessed at https://www.cfp.net/docs/default-source/news-events---research-facts-figures/cfpboard-morningconsult-us-recession-study-2019-10.pdf .