EDITOR’S JOURNAL

Consuming Matter

I’ m reading a fascinating working paper from the Bank of Canada called The Covid 19 Consumption Game Changer: Evidence from a Large-Scale Multi Country Survey. It looks at consumption trends in five European countries once pandemic restrictions were lifted — and how these trends may shape structural changes going forward.

According to the survey that took place in July 2020, a number of households consumed less than before — or not at all — especially in the hospitality, public transportation, and retail sectors.

What’ s particularly compelling is many households report not missing the consumption they did previously. In France, 23% don ’t miss going to hairdressers and in Germany, 21% don ’t miss restaurants. Of note, “these households are mainly middle-aged, high-income households and are the least likely to have had a personal COVID-19 infection experience, ” the study says. This fact may “ reinforce the magnitude of the change in consumption habits. ”

In Spain and Italy, for example, the study found that saving more money was a substantial motivator, while “ savings ” was the third reason for less consumption in Germany, France, and the Netherlands, after infection risk and preference shift.

People tend to save more during times of unrest and uncertainty — even when the circumstances may not directly affect them. We only have to look at the Great Depression as an example. The generation born during that time — regardless of socioeconomic background — truly learned the importance of putting away for another day.

Today, between the pandemic, horrific climate changes on the West Coast, and rising inflation nationwide, higher-income consumers are not only saving more but want to make sure their money is working for them.

Solid professional advice can only win in this regard. Clients already know your value. But some investors, previously content with robo-advisors and other selfdirected pursuits, now desire a sounding board. And they are willing to pay for the advice. This year, I’ ve interviewed many advisors who report that business has increased significantly, and they are bringing on more clients than ever before. They attribute the success not just to the complexity of client needs but technology.

They invested more in technology to prospect for clients and manage their client bases, but also greatly benefited from the industry ’ s relenting on the use of, say, electronic signatures. As Sun Life ’ s Susan Silma told delegates at the Advocis Symposium on November 16, there ’ s an “ exciting opportunity to leverage technology to drive efficiencies and an improved client and advisor journey and at the same time, to make the role of advice and advisors even more clear and relevant. ” For more of Silma ’ s comments and other Symposium speakers, check out Susan Yellin ’ s coverage starting on page 20.

Have some downtime during the holidays? I believe MAID on Netflix is required viewing for every financial advisor. It gives an authentic depiction of the working poor ’ s plight and the obstacles of climbing to the next income level. Check out the running calculator showing income earned and then all the deductions, expenses, and liabilities. If you watch, let me know your thoughts.

Big congratulations to FORUM columnist Erin Bury on the birth of her daughter on November 3.

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