Last year didn’t just bring change. It brought a seismic schism that will permanently alter how we work and live. What began as a public health crisis — one that will continue into the new year — became an unprecedented series of different crises that also took both jobs and the stock market on a roller-coaster ride.
As we head into 2021, it’s time to look ahead for how we can take what we’ve learned from the past 12 months — and further back — and sort out the trends that will be most advantageous.
Part Great Recession, part great reinvention
Like the last financial crisis of 2008-2010, this year economic volatility drove people to focus on high quality assets and liquidity while taking on less risk. But over the course of the pandemic, we started to see job losses stabilize, at least compared with a decade ago, and stocks bounced back and even surged.
This allowed for many to shift from being focused on their next paycheck to insuring against adverse events impacting their own health. In fact, we saw a notable difference in the purchase of health protection products compared with a decade ago.
Looking into 2021 and beyond, regardless of age, health or status, more Americans are acknowledging their own mortality and the importance of protecting their loved ones.
The three most important words in finance are ‘digital, digital, digital’
The ‘need for immediacy’ was becoming a cornerstone of the financial world before the pandemic, but in 2020 we experienced a decade’s worth of digital transformation in just six months. The industry’s focus on digital innovation is particularly critical as millennials and Generation Z increase their share of the personal finance marketplace. In fact, our recent consumer poll showed that more than half of these groups would prefer to make purchase decisions through digital experiences using virtual or augmented reality technology.
As we look ahead
to 2021 and beyond, the digital experience for all financial offerings must
catch up to comparable industries as everyone expects compelling products, seamless engagement and access to a broad
shelf of offerings how and when they want them.
One crisis detoured — student loan debt
employers and policy makers were focused on supporting college grads by
figuring out ways to help reduce their college debts. To wit, we released of a survey in December 2019
which found that 35% of employers were concerned about their employees’ student
loan debt. However, the economic fallout of the pandemic combined with a new
administration is poised to turn that world upside down.
While we don’t know the full extent to which loan repayment policies will change, it’s possible that everything from income-driven repayment to full on debt cancellation is in play. No matter the specific outcome, this new dynamic will allow for greater focus on emergency and long-term savings alongside retirement planning.
A shift in trust
We entered 2020 on
the brink of a trust crisis, as traditional institutions from mainstream media
to the government became divisive sources and many flocked to social media
circles to serve as their most relied upon source for financial guidance. In
fact, during the prosperous
decade that preceded 2020, the rise of crowdsourcing meant many of us not only used
recommendations from strangers to decide where to eat or what movie to see, it also
determined our biggest financial decisions.
Looking ahead, the importance of trust has never been more critical, now ranking as the second most important factor in purchasing decisions. When it comes to your finances, we’re seeing the bumpy social media ride of this past year push many toward quality, trusting expert advice over friend-turned-unfriended ‘sources.’
This past year tested us all in ways we never could have predicted. But now that we all know what we’re capable of, we can plan ahead and ensure we’re more prepared for the obstacles facing us in 2021.
Amanda Wallace is head of insurance operations with MassMutual, a life insurance provider.