Nonfiction Research published study that shows, in a country where women are quietly fuming about feeling underpaid, 45 million American women would consider paying their bank for salary consulting. And yet, not a single bank currently offers it. The first retail bank to offer women a fair pay review will not only help women, they’ll also open themselves up to a market of female professionals who are eager to earn fair compensation. It’s a phantom billion dollar market that could increase women’s salaries while being hugely profitable to banks.
Almost immediately upon beginning our research, we realized that a staggering number of Americans are leading double lives when it comes to money. To their friends and neighbors their lives look normal, even prosperous. But privately, behind closed doors, Americans are badly in need of help with money and the emotions around it. We discovered that 52% of Americans admit to having cried because they didn’t have enough money. That number alone should be sobering, but drilling deeper reveals that this isn’t just an issue for the poor and lower middle class: even among those who earn over $200,000 a year, 41% have cried because they didn’t have enough money.
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While Americans are publicly enjoying barbecues, trips, and glasses of rosé, their private financial lives tell a more checkered story:
37% of Americans have gone to sleep hungry because they didn’t have money.
12% have stolen something.
5% admit to having taken half-eaten food out of a garbage can.
But you’d be hard-pressed to find pictures of these activities on Instagram, where pics of rosé sipping are so common it’s hard to believe the stuff accounts for only 1.5% of US wine consumption. Americans have become like superheroes in reverse: heroes in public, with secret identities of normal people who break down into tears and struggle with money.
In Part One:
There is an abundance of evidence that social media itself is increasing the pressure on Americans to keep up the public half of their double lives. A new type of social media celebrity has warped lifestyle expectations over recent years. Exemplified by Dan Bilzerian and Alexis Ren, the Free & Flaunting It are our new stars. This is not without its consequences, as we also found that 28% of millennials admit to intentionally making themselves look wealthier in their social media posts.
Worse, Americans are managing their double lives in a way that has become a crisis. Aware of which financial indicators their peers can see, Americans are financing the public half of their double lives by borrowing from the private half. At the same time Americans are spending more money on travel and real estate — and more time on social media — the finances their friends can’t see are being eviscerated: the national savings rate is at an all-time low; credit card debt is at an all-time high; 20 million Americans have a shopping addiction, almost twice as many Americans have credit cards (76%) as have retirement accounts (47%); and as other studies have shown, 44% of Americans couldn’t handle a $400 emergency without borrowing funds.
The good news is that Americans are open to help. Many Americans want help with eight key parts of personal finance: knowing if they’re paid fairly, maximizing their salary at their current job, planning career moves that earn them more money, monthly budgeting, right-sizing their debt, planning affordable vacations, having someone to talk to holistically about their financial life, and dealing with the spending pressures that status anxiety exerts.
Unfortunately, not one item in the previous paragraph is currently offered by the mainstream financial services industry — at least not widely available to households with under $100,000 of investible net worth. Considering that 69% of households have less than $1,000 in savings, that’s not many households. There is a mismatch between the help Americans want and need to pay for and the financial services that are easily available to them.
In Part Two, we we discuss reasons why this mismatch exists and what could profitably be done to address it. Some services — including the eight listed above — aren’t even considered “financial services” and thus can’t be found in local banks. Some services, like financial advisors, are rarely used.
Others simply don’t exist. For instance, since the American financial services industry is organized into silos of specialists (mortgage lending, accounting, wealth management, checking accounts, etc.), there is no mainstream service that holistically advises a person or household about everything financial all at once. While there are primary care physicians for the average American, there is no Personal CFO. In some ways this is no surprise, as the financial services industry was not built from a customercentric, inside-out perspective.
There are many ways the financial services industry could profit from taking a customer-centric approach to the modern financial needs of Americans. Some are incremental and piecemeal, like partnering with a compensation consultant to offer salary evaluations to the tens of millions of American women who doubt they’re being paid fairly. Others are bigger and more innovative, such as expanding into a Personal CFO service. Our research reveals which services Americans are willing to pay for — and even which services they’d be willing to pay for from their local bank.
In Part 3, w we we look at several different types of financial companies and address their advantages and disadvantages for competing in a hypothetical customer-centric world. We start with banks, who have the inside track via the most immediate, daily transactional relationship with consumers, then address non-banks and the possibility of new entrants onto the scene, financial service providers that do not currently exist.
The most powerful moment of our research came when interviewing a convicted bank robber about how to improve the financial services industry. The remarkable Clay Tumey told us that he chose to rob banks not because he had to, but in part because he was angry: banks withheld information from their customers about how to be better with money. In that moment, we heard a bank robber lay out a simple, strategic, and moral vision for the future of financial services. Americans are now, amidst their double lives and secret identities, more in need of personal financial guidance than ever. We’ve reached a point where the industry must modernize, rethink itself from a customer-centric perspective, and make good on what Clay Tumey wanted banks to be.
The message of this report is twofold. First, it is a Katrina-level warning about Americans’ double lives with money. Second, it’s a Katrina-level warning for the financial services industry that modernization must come — not just in the form of technology, but through customer-centric services. If existing players cannot find a way to provide these services, it’s likely that a new entrant will. If a new financial entity emerges and fills this void, it will have dire ramifications for the financial companies that fail to adapt and will essentially reshape the industry.
We hope this report — though its uncensored look at Americans, money, and financial services — is the beginning of a blueprint.
In an attempt to convince jaded Louisiana residents of the coming danger of Hurricane Katrina, the National Weather Service offered a vivid warning:
HIGH RISE OFFICE AND APARTMENT BUILDINGS WILL SWAY DANGEROUSLY…A FEW TO THE POINT OF TOTAL COLLAPSE. ALL WINDOWS WILL BLOW OUT.
AIRBORNE DEBRIS WILL BE WIDESPREAD…AND MAY INCLUDE HEAVY ITEMS SUCH AS HOUSEHOLD APPLIANCES AND EVEN LIGHT VEHICLES. SPORT UTILITY VEHICLES AND LIGHT TRUCKS WILL BE MOVED. THE BLOWN DEBRIS WILL CREATE ADDITIONAL DESTRUCTION. PERSONS…PETS…AND LIVESTOCK EXPOSED TO THE WINDS WILL FACE CERTAIN DEATH IF STRUCK.
POWER OUTAGES WILL LAST FOR WEEKS…AS MOST POWER POLES WILL BE DOWN AND TRANSFORMERS DESTROYED. WATER SHORTAGES WILL MAKE HUMAN SUFFERING INCREDIBLE BY MODERN STANDARDS.
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