Life Events a Trigger for Financial Actions

Often, life events trigger financial actions by individuals or households.

According to a study from Hearts & Wallets, the trial of a new financial services provider is often driven by life events. One in five (19%) investors who tried a new provider was influenced by at least one life event, usually a move or job change.

Laura Varas, Hearts & Wallets partner and cofounder, notes that life events can be a powerful influence for taking financial actions, although financial professionals and friends and family are more common influencers for investors. She suggests better understanding of the different influences for financial decisions and how they may combine will help financial services firms and advisers better serve clients.

According to the study, three out of four people who married or had a child averaged two actions within 12 to 18 months, such as increasing general savings and insurance purchases (life, health or long-term care). New parents are more likely than newlyweds to make an immediate investment in a college savings plan, while newlyweds are more likely to take quick steps to change their investment mix, purchase insurance and increase retirement savings. Pre- and post-retirees are twice as likely as those still in the retirement savings accumulation phase to try a new financial services provider after receiving an inheritance.

For an annuity purchase, a financial professional was the top influencer (46%), followed by friends and family (23%), an attorney or accountant (11%) and a life event (7%). When it comes to increasing retirement savings, the study found friends and family were the biggest influencers (30%), followed by financial professionals (22%) and life events (19%).

The study analyzes attitudes and behaviors of investor lifestages from age 21 through postretirement and is drawn from the Hearts & Wallets Quant Panel Database. The Quant Panel serves as the engine for Hearts & Wallets annual reports as well as emerging trend analysis and consists annually of more than two million data points from 85 families of savings and investment questions asked during 40-minute interviews of 5,500 U.S. households.