Study Finds Big Differences In What Members Want In Planning Advice

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What do consumers want when it comes to planning for their financial future? That depends on which member you ask.

A new study from the Filene Research Institute, "Professional Financial Advice for Consumers: Implications for Credit Unions," found that consumers differ greatly in their desire for information and advice on savings and investments, and on how to obtain it. The research was based on data from a mail survey of 3,780 nationally representative households and conducted by tesearchers Jinkook Lee and William A. Kelly, Jr.

The study identified four market segments: downscale and local; upscale and connected; the independents; and advice seekers.

Among the downscale and local group, 98% regard banks, s&ls and credit unions as the best source of information on savings and investments. This group is the least affluent and least educated, does not like to spend time on investment decisions, and is not willing to pay for advice. These households are ideal for traditional depository products (including IRAs), which are provided in a friendly, local setting.

Only 2% of the upscale and connected group views banks and credit unions as the best source of advice. This is the most educated and affluent of the four groups. The group appears to offer limited opportunities for credit unions.

More than 90% of the independents group disagreed with the statement, "It is important that a financial services representative keeps me informed where I stand financially." Eighty-eight percent are unwilling to pay for financial advice, and 82% feel qualified to make their own investment decisions. They are the ideal customers for traditional offerings at many discount brokerage firms, according to the authors.

And 83% of the advice seeker group says they need advice on investment options. Ninety-six percent say they like to discuss their financial options before making a decision about them, and 88% say it is important that a financial services representative keeps them informed where they stand financially. This is the largest group by far, comprising 55% of respondents, the Filene report concluded.

"Credit unions have an excellent opportunity to capitalize on this research," said Bob Hoel, Filene Executive Director. "The advice seeker group offers a particularly appealing market segment for credit unions. Few existing institutions appear to be serving this group adequately. Maintaining trust while giving advice on investing in securities markets can be difficult because of the risk inherent in these markets. However, to the extent credit unions can identify and establish partnerships with investment professionals, this segment of consumers offers substantial opportunities."

Hoel further pointed out that credit unions may also wish to investigate the potential market for trust services within this group.

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