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.
Joel Sinkin is the president and Terrence Putney, CPA, is the CEO of Transition Advisors LLC, which consults on owner transition in accounting practices nationally, including mergers & acquisitions, succession planning, and structuring owner agreements. Reach them at jsinkin@transitionadvisors.com and tputney@transitionadvisors.com, or (866) 279-8550.
Al Anderson, CPA, has been a global leader in accounting and assurance advancement for more than 30 years. Over the course of his career, he has been named to Accounting Today’s Top 100 Most Influential People a number of times, most recently in 2017, 2018 and 2019. As president and founder of Account-ability Plus, LLC, he has worked directly with auditors and firms for over 25 years to transform their operations for auditing in the future, achieve efficiency and effectiveness, and surpass client expectations. He is also a nationally recognized consultant, educator and speaker, and guides his clients and their staff through uniquely designed programs and assessments with a future-focused, reality-based approach. Having led innovation for the profession as a firm partner, director, and AICPA executive, Anderson continues to advance insight and dedicate himself to driving accounting firm excellence. He recently led the AICPA/ Rutgers Data Analytics initiative and served as advisor to the AICPA and their Audit of the Future initiatives.
Patrick Donovan is a senior vice president at Bright Horizons, the nation’s largest provider of education benefits.
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.
