Knowledge Drives Confidence, Confidence Drives Growth

The Franklin Templeton–Gallup Economics of Recovery Study has heralded some interesting results in regard to the attitudes and behavior of Americans in response to the ongoing pandemic—and what developments could change both. Our Fixed Income CIO Sonal Desai shares her thoughts on the latest wave of survey findings, including the value of trusted advice in navigating financial and investment concerns.

In this post, I want to focus on another set of insights that emerged from the fourth pulse of our Franklin Templeton-Gallup Economics of Recovery Study (there were too many to fit them all in my prior post!)

Uncertainty and information have emerged as two recurrent key themes in our study. Uncertainty—both about COVID-19 and the economy—has a major impact on our attitudes and behaviors, and we know that uncertainty tends to depress both consumption and investment. Getting the right information is a key antidote to uncertainty, but our very first pulse showed that getting the right information is no easy task. You need to find expert advice that you can trust.

Our latest poll shows that equity investors with financial advisers are much more likely to feel “very confident” in their investment strategy compared to those without advisers—by a full 20 percentage points.1 This confidence-boosting impact works across income levels: working with a financial adviser gives greater confidence to investors with lower incomes as well as to wealthier ones.

One might object that this should not be too surprising: once you have decided to take more active control of your financial future and engaged professional help to shape your investment strategy, you should feel more confident in it. True enough, but I see three important implications here.

First, in an era dominated by skepticism toward “the experts,” it’s reassuring to see that about half of all investors (48% in our poll) turn to expert advice to secure their financial future and feel good about it. Maybe this points to a difference between the “headline-grabbing” experts and those who work in the trenches to help people.