Wealth advisors and RIAs must navigate an increasingly complex financial landscape as inflation and recession fears push many workers to scale back their retirement contributions.
A recent Morgan Stanley survey highlights this growing challenge, revealing critical insights into workforce behavior and the opportunities for advisors to step in with value-driven solutions.
Retirement Contributions Decline Amid Economic Anxiety
Economic uncertainty is prompting workers to prioritize short-term financial security over long-term planning. According to Morgan Stanley's survey of 1,000 employees and 600 HR leaders, 39% of workers report reducing contributions to their retirement plans due to concerns about inflation and the potential for a recession. This marks a three-percentage-point increase from the previous year.
Despite these reductions, participation in 401(k) plans remains high, with 86% of respondents continuing to contribute. This presents a key opening for advisors to reinforce the importance of retirement savings and provide tailored strategies to help clients stay on track amid economic headwinds.
Generational Differences in Financial Behaviors
Gen Z workers are the most likely to scale back retirement contributions, with 48% citing economic fears as a major driver. For wealth advisors, this highlights the need to engage younger clients with education and solutions that address their unique concerns. This cohort represents a long-term growth opportunity, but only if advisors can build trust and deliver relevant guidance early in their financial journeys.
Across all demographics, 67% of respondents report cutting back on various savings accounts, not just retirement plans. This underscores a broader trend of financial conservatism, signaling that advisors may need to adjust their approach to account for clients’ shifting priorities.
Opportunities for Advisors to Lead
The Morgan Stanley survey also highlights an opportunity for wealth advisors to partner with businesses and HR departments to offer enhanced workplace retirement services. Key strategies include:
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Access to Professional Advisors: Employees express a desire for direct access to financial professionals who can provide personalized retirement planning. Advisors can position themselves as essential partners for organizations looking to offer this benefit.
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Comprehensive Investment Planning: Beyond simple 401(k) matching, workers are seeking integrated solutions that include annuities, managed accounts, and other income-generating products. Advisors who can deliver holistic strategies stand to capture significant value.
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Employee Education Initiatives: Many employees lack confidence in their ability to manage retirement investments. Advisors who collaborate with employers to deliver workshops or digital resources can fill this knowledge gap while demonstrating their expertise.
According to Jeremy France, Morgan Stanley’s head of institutional consulting solutions, “Modern workplace retirement plans must go beyond simply offering a 401(k). By integrating advisory services and investment solutions, companies can both enhance employee financial security and strengthen talent retention.”
Rising Financial Vulnerability Across the Workforce
It’s not just retirement savings that are under pressure. Separate research from J.D. Power paints a broader picture of financial vulnerability among Americans. The study finds that 43% of retail bank customers now fall into the “financially vulnerable” category—up from 27% in 2020. This metric considers factors such as spending-to-savings ratios, creditworthiness, and insurance coverage, signaling a troubling trend in overall financial wellness.
For advisors, these findings emphasize the need to expand beyond traditional retirement planning. Clients increasingly look to their financial professionals for guidance on budgeting, debt management, and comprehensive financial health.
Retail Banks Face Challenges—and Opportunities
J.D. Power's research also identifies a growing appetite for financial advice from retail banks. Younger customers, in particular, are voicing their need for immediate, actionable guidance. However, many existing tools, such as budgeting apps, remain underutilized.
“Banks have a once-in-a-lifetime opportunity to establish enduring client relationships,” says Jennifer White, senior director for banking and payments intelligence at J.D. Power. “But they must act quickly—customers cannot afford to wait for solutions.”
For wealth advisors, this represents both a competitive challenge and a chance to differentiate. By offering superior advice and tailored financial strategies, RIAs can position themselves as trusted alternatives to the generic services provided by retail banks.
A Call to Action for Wealth Advisors
As workers grapple with economic uncertainty, wealth advisors have an opportunity—and a responsibility—to step in with solutions that restore confidence and drive long-term financial health. Advisors who embrace the following approaches can better serve their clients while reinforcing their value proposition:
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Proactive Engagement: Regular check-ins with clients can uncover changes in their financial circumstances and provide opportunities to offer timely advice.
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Customized Strategies: Tailored approaches to retirement planning, including income diversification and inflation-hedging strategies, can resonate in uncertain times.
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Education as a Tool: Financial literacy programs for both individuals and employer partners can empower clients and strengthen advisor-client relationships.
The current economic climate may be challenging, but it also presents a moment for wealth advisors and RIAs to shine as indispensable allies. By addressing immediate concerns and reinforcing the importance of long-term planning, advisors can help clients weather the storm while laying the foundation for lasting financial success.
