Financial satisfaction of people in the U.S. rebounded strongly in the third quarter of the year, according to a new survey by the American Institute of CPAs, reversing the lows in the second quarter in the midst of the recession brought on by the novel coronavirus pandemic.
The AICPA’s Q3 2020 Personal Financial Satisfaction Index measured 33.1, representing a whopping 99 percent (16.5 point) increase from the previous quarter. That’s the biggest quarterly increase in the 27-year history of the PFSi, and a complete turnaround from the second quarter, when the index had its largest ever quarterly drop.
Steven Simpson is the senior director and head of data science at Cornerstone Advisors.
Ryan Strauser is a Principal and Principal for Marketing in the Ares Wealth Management Solutions Group. Prior to joining Ares in 2021, Strauser was a senior vice president at Black Creek Group in the Product Management Group where he focused on product management, positioning and due diligence efforts for the firm’s offerings.
Previously, Strauser was a vice president at Jackson National where he focused on new product development, investment selection and product positioning. Before that, he held similar positions at OppenheimerFunds (now Invesco), Old Mutual Capital and Great-West (now Empower). Strauser holds a bachelor of business administration in marketing from Wartburg College and a master of business administration from the University of Colorado.
Alex Selarnick is an associate at Goodwin who advises insureds, insurers, and insurtechs, as well as their lenders and investors on a broad range of compliance, regulatory and transactional matters. Mr. Selarnick’s practice focuses on the intersection of insurance and technology, and he frequently works with clients on the legal and regulatory challenges associated with the use of technology in the insurance space. Mr. Selarnick also has extensive trade credit insurance experience, and he guides market leading supply chain and trade finance companies on the development and negotiation of international credit insurance programs.
The PFSi is built around various factors, including the labor market. The gains can be mainly attributed to improvements in job openings per capita and underemployment. Those had the biggest impact on increasing the overall PFSi. The biggest factor driving the quarter-over-quarter rally was a 35 percent (37 point) decrease in underemployment. A decrease in underemployment improves overall financial satisfaction in the index. While there was an improvement in underemployment in the third quarter from Q2’s record high, it’s still 117 percent above its level a year ago. For the second consecutive quarter, underemployment is still the biggest negative contributor to the average American’s personal financial satisfaction. The Q3 underemployment level reflects data measured through the middle of September.
“As Americans continue to navigate the economic impact of the COVID-19 pandemic, it is important to remember that the fundamentals of financial planning haven’t changed,” said AICPA PFS Credential Committee chair Dave Stolz in a statement Thursday. “Though the stock market’s record performance is encouraging, 2020 has served as a reminder of the volatile nature of markets. As the impact of COVID-19 continues to play out across the country, investors should weigh their risk tolerance and ensure they have ample cash on hand. Further, a tax-efficient financial plan that includes a diversified portfolio can give confidence that long-term financial goals will remain within reach through this period of extreme uncertainty.”
The coronavirus put millions out of work, prompting job openings per capita to show a record plummet earlier this year. In the third quarter, job openings started to recover, climbing 37 percent (20 points) compared to Q2. That factor is now only 10 percent below its measurement a year ago before the pandemic. The Q3 index comes from July data from the U.S. Bureau of Labor Statistics.
