••• financial services research
Hard to build that nest egg
Down payment looms as biggest barrier to home ownership
A survey on the biggest perceived barriers to home ownership has found significant generational and regional differentiators when it comes to housing, including how much is being spent on rent, flexibility in budget and compromises for the ideal home location. While a majority of Americans agree that buying a home is a good financial decision, saving enough money for a down payment and the process of getting approved for a loan are the major financial barriers.
The survey of 2,018 Americans was conducted by Atomik Research on behalf of Unison Home Ownership Investors, a San Francisco provider of home ownership investments.
A recent New York Fed Household Debt and Credit Report shows total consumer debt in Q2 2017 increased by $114 billion to $12.84 trillion and student loan debt alone reached $1.3 trillion. Between skyrocketing rents, student loans and debt to pay off, many Americans have a hard time budgeting for a down payment. To understand changes in home purchasing behavior and industry perceptions, Unison’s survey dove deep into the decision-making process to explore barriers of entry, impact on monthly financials and accessibility to additional funds.
Although the majority of Americans understand that owning a home is a sound investment and are willing to make sacrifices for the ideal place, they are not ready to follow through with a purchase. Part of this is a result of not fully understanding the financial benefits or trusting the credibility of information available.
While a majority of respondents (77 percent) agree that buying a home is a good financial decision, 15 percent admit they are not comfortable when it comes to understanding the implications that purchasing a home has on personal finances.
Over half (63 percent) agree to some extent that home ownership can reduce the stress and anxiety associated with rentals and moving and improve mental health. Fifty-four percent agree to some extent that a home mortgage is often less expensive than renting, which can improve family health by freeing up money for healthier food and doctor appointments. Nearly half of respondents (46 percent) would accept a financial strain if it meant living in a neighborhood with high-quality schools and was close to good job opportunities.
When receiving information on buying a home, 54 percent would trust the credibility of their local realtor/real estate agent; 43 percent would trust their family and friends or their bank and only 12 percent would trust their local newspaper.
Once the value of home ownership is understood, other financial factors are stopping prospective buyers from moving forward. From rising property prices to not being able to save enough money for a down payment, people would rather avoid the hassle. Also, there’s a disconnect between what the respondents felt was required of a down payment for a mortgage, versus what is considered reasonable.
Saving for a down payment is the biggest financial barrier for 41 percent of those looking to become home owners; 30 percent find it a headache to get approved for a loan. Fifty-six percent of respondents believe that low wages and debt make it hard to save money in their area.
However, the high prices of rental homes and apartments are also becoming a major concern for 57 percent of respondents, followed closely by cost to buy or own a home in their area (53 percent). In fact, 66 percent of those surveyed admit paying between $500 and $2,000 per month for rent or mortgage. And more than half (55 percent) admit this to be a strain on their monthly budget.
While three in 10 would expect their bank to require a 10 percent down payment for a mortgage, 24 percent felt a 5 percent down payment would be a more reasonable amount.
The survey found that Millennials, compared to Baby Boomers and Gen Xers, are also far less likely to take the plunge. In addition, in major metro cities where housing is expensive, people are more likely to spend outside of their budgets to purchase a home. Millennials (56 percent) are more likely to be concerned about the cost to buy or own a home than Baby Boomers (47 percent). Fifty-six percent of Millennials reported that they felt “very comfortable” or “somewhat comfortable” understanding the financial options available for purchasing a home.
Millennials (38 percent) are less likely than Gen X (51 percent) and Baby Boomers (55 percent) to agree that home ownership allows for deductions on federal, state and local income taxes. At 65 percent, they are more likely than Gen X (59 percent) and Baby Boomers (51 percent) to view mortgages as an opportunity to own a home by the time they retire. And Millennials (32 percent) are far less likely to own their home compared to Gen X (52 percent) and Baby Boomers (65 percent). Nearly 60 percent of Millennials report rent and mortgage payments as a strain on their budget each month, compared to 58 percent and 43 percent for Gen X and Baby Boomers, respectively.
In cities where housing is most expensive (New York City and San Francisco), respondents were most willing to spend outside their budget if the neighborhood had better schools and job opportunities. Portland, Ore., (35 percent) and Hartford, Conn., (36 percent) were least likely.
Los Angeles had the highest percentage of participants paying over $2,000 per month for rent or mortgage (27 percent), compared to the average of 7 percent. Nearly a third (32 percent) of respondents in San Francisco expect they would need to put down 20 percent for a new home mortgage.
The online survey was conducted with a sample of 2,018 general-population respondents in the United States and in accordance with MRA guidelines and regulations. It was fielded between August 7 and 11, 2017. Of the survey participants, 100 respondents were in each of the following cities: Baltimore; Boston; Chicago; Hartford/New Haven, Conn.; Los Angeles; New York; Norfolk-Portsmouth-Newport News, Va.; Philadelphia, Phoenix; Portland, Ore.; San Francisco; and Seattle. Atomik Research is an independent agency that employs MRA certified researchers and adheres to MRA code.
••• shopper insights
Where does digital engage best?
Valassis study examines the role of place
Recent research from Livonia, Mich., media delivery firm Valassis examined the influence of digital advertising on purchase decisions. The findings from Motivating the Dynamic Shopper: Purchase Decisions In-Progress, focus on five key moments in the consumer purchase journey – thinking, wanting, watching, acting and shopping – and examine the sometimes-hidden impact of advertising at each stage.
The research analyzes how digital ads best engage and then motivate Millennials, Gen X, Baby Boomers and parents to take action. According to this data, nearly 55 percent of shoppers surveyed notice relevant digital ads but don’t click, respond or buy immediately. This is especially true for parents (66 percent), Millennials (62 percent) and Gen X (60 percent).
So, what motivates these shoppers to move along the path to purchase? Coupons (39 percent) and discounts (32 percent) are the top two triggers influencing consumers to respond to a digital ad along with seeing a product ad in both print and online – 24 percent of consumers are more likely to respond when seeing an ad in both mediums, increasing to 50 percent for parents and 47 percent for Millennials.
Marketers should also consider consumer location and device preference to ignite action. Today’s dynamic shopper is constantly on the move, yet “home” is the top place where they pay attention to digital ads.
Research reveals:
- Desktops and laptops rank first among devices on which all three aforementioned generations are most likely to notice or act on a digital ad at home.
- Millennials, however, notice or act upon ads similarly across all digital devices while at home, with only a four-to-five percentage-point difference in attention paid to ads on desktops versus tablets and mobile phones.
- At work, digital ads are noticed on desktop or laptop by: 27 percent of Millennials; 26 percent of parents; and 11 percent overall.
The device on which shoppers are most likely to notice and respond to digital ads depends on the product featured and the target audience. For department/discount store ads, 36 percent of Millennials prefer their smartphone while 41 percent of Boomers are most likely to notice these ads on their desktop/laptop. In contrast, furniture is one category where Millennials notice ads more on the desktop/laptop, surpassing the smartphone for response.
••• health care research
Getting doctors back in the driver’s seat
Report finds care management decisions shifting back to docs
The revolution that has yet to materialize: value-based care was expected to take off everywhere but progress has slowed and in some cases plateaued over the last two years as physicians increasingly push for evidence that this change is worth the required effort and will improve clinical outcomes. Without it, they see little reason to alter the status quo.
In its third Front Line of Healthcare report, Bain & Company, together with Research Now Group, found that bringing physicians back into the decision-making process helps create greater momentum for change and physicians are eager to assume a more hands-on role in identifying a health care model that will help them balance costs and patient care.
After years of experimentation, physicians have become more cautious about adopting new structures and are particularly hesitant to embrace new systems when the clinical implications and the return on investment are unproven and the administrative burden significant. Based on survey results from nearly 1,000 U.S. physicians across eight specialties, 100 finance officers and 100 procurement officers, Bain found that more than 60 percent of doctors believe it will be more difficult to deliver high-quality care in the next two years as they struggle to cope with complex regulations, an increasing administrative burden and frustration with electronic medical records.
Following five years of rapid experimentation and change, these disruptive transitions have slowed the health care industry’s ability to curb spiraling costs and improve care. In response, all sectors of the industry are rethinking their strategies to address these challenges, often resulting in a significantly altered and challenging environment that can inhibit physicians’ ability to care for and treat patients.
Bain’s research reveals that more than 70 percent of physicians prefer fee-for-service payment versus value-based care payment models, even though they recognize the former is more expensive. This preference demonstrates that financial logic alone is not enough to foster physician support. Physicians are unwilling to change until it is clear that these models deliver the same or better clinical outcomes.
Health care organizations on the forefront of change are bridging this gap, taking steps to re-empower physicians by recognizing the critical role they play in managing costs and gaining their buy-in to support the move to a value-based model. These organizations have realized that empowerment creates a virtuous circle: Physicians engaged in decision-making are more likely to promote their organizations and to be aligned with their missions, likely leading to better care and outcomes.
Medtech procurement is the best example of this alignment. The move to re-empower physicians in the procurement process reverses a 10-year trend that had shifted decision-making away from doctors and toward procurement professionals who chose products mainly on the basis of price, rather than patient outcomes, often putting the two groups at odds. Now, more than 80 percent of practices said surgeons and procurement make decisions jointly, weighing clinical and economic value together. Further, 85 percent of surgeons now agree that procurement has a neutral or positive impact on cost and quality. While product quality and patient outcomes continue to rank as the top criteria in purchasing decisions, the most successful companies demonstrate economic value as well: a full 70 percent of surgeons surveyed believe “best value for price paid” is important – a significant increase from two years ago. In this environment, medtech companies can improve on their competitive standing by building category leadership positions in a crowded field and offering value-added services.
In contrast, nonsurgical physicians continue to feel their behavior is constrained by payer and other restrictions, most acutely in prescribing drugs: only 19 percent believe they can rely on pharmacy benefit managers (PBMs) to improve costs and quality of care. Yet, more than half of the doctors surveyed – including nearly 80 percent of cardiologists and primary care physicians – say they feel an increased responsibility to help control pharmaceutical prices, particularly their patients’ out-of-pocket costs. Physicians suggest the most effective approaches to lowering drug prices would be to improve price transparency and facilitate increased competition among pharma manufacturers.
“Doctors are steeped in a field that requires lifelong learning, so of course they are wary of new, unproven approaches,” says Josh Weisbrod, a leader in Bain’s Healthcare Practice and one of the report’s authors. “In the push to infuse more protocols into health care and make it value-based, the industry should not underestimate the importance of helping physicians combat their skepticism so they can take a more a more active role in shaping and leading change.”
••• financial services
Investing in the frontline
Employee engagement critical to fixing financial industry
The financial services industry is experiencing a stronger need to prioritize its focus on workplace culture to better attract and retain talent, according to a survey commissioned by Kronos Incorporated and conducted by Future Workplace.
The survey found that 62 percent of financial services employees working in banking, insurance and asset management feel that the 2008 financial crisis still impacts how they view the industry, with many desiring more transparency from senior management. Nearly 75 percent of employees also believe that the financial services industry can continue to recover strongly and a fourth say it could do so by giving more charitable donations and offering employees time to volunteer.
The survey’s primary focus is on what the financial services industry can do to attract, engage and retain employees in the current hyper-competitive environment. In this national survey of more than 800 financial services employees, flexibility, philanthropy, meaningful work, transparency and innovation emerge as the defining issues that matter most to this multi-generational workforce.
When it comes to what makes an attractive employer, good pay and benefits matter but so do flexibility and philanthropy: 69 percent of employees say competitive wages matter most; 68 percent say a good benefits package; 52 percent say flexible work arrangements; and 51 percent say opportunities for career advancement.
Seventy-six percent of employees say they are driven by more than just money when they seek a new job and 73 percent say they need to see what a company stands for before joining. In addition, 52 percent of employees say they need their company to have a strong philanthropic mission.
When it comes to what they have given up to work in the financial services industry, the top answers were work-life balance (36 percent) and flexibility (23 percent). Millennials and members of Gen Z were especially sensitive to this loss with 70 percent feeling as though they had given up flexibility (as opposed to only 12 percent of Baby Boomers) and 83 percent feeling as though they had given up work-life balance (as opposed to 29 percent of Baby Boomers).
When asked how their managers could best support them, flexibility again emerged as a front-runner with 42 percent of employees saying that giving them more flexibility would be the most effective means of support. Additional ways that managers could provide support to employees included investing in learning and development (41 percent); helping employees achieve their personal goals (39 percent); being challenged (30 percent); giving more frequent feedback (30 percent); and mentoring (29 percent). In every category, Millennials and members of Gen Z found these strategies to be more effective than their Gen X and Baby Boomer counterparts.
When asked how they thought their company could better engage them in their work, 45 percent of employees say they wanted to be shown that their work made a difference, 39 percent say lessening office politics would help; and another 39 percent say that removing bureaucracy would be an effective tactic.
In addition, 36 percent say that supporting their personal and professional goals would help and 19 percent say removing silos would heighten engagement.
When asked what their employer could do to attract and retain talent, 54 percent of employees say that companies should reward people more than once a year with a bonus; 47 percent say the company should recognize people more often; 38 percent say that the company should provide ongoing coaching and development; and 29 percent say their companies should provide more training for managers. Employees also felt that time off for professional development (28 percent) and volunteering (20 percent) would help attract and retain great talent.
In terms of who impacts an employee’s engagement the most, 29 percent of employees say their manager had the biggest effect while 26 percent say it was their colleagues; 22 percent say it was executive management; 15 percent say it was the CEO; and six percent say that HR was the biggest influencer.
Seventy-nine percent of financial services employees say that working for an innovative company is important to them. While 75 percent of employees say they view their companies as being innovative, many still see ways for their company to improve including allowing for the free flow of ideas (53 percent); having a budget for investing in ideas (37 percent); holding idea competitions (35 percent); and hiring entrepreneurial employees (31 percent).
Employees felt that the financial services industry could become more transparent by encouraging straight communication (49 percent); eliminating layers of titles (33 percent); hiring and engaging transparent employees (30 percent), creating a feedback forum (28 percent); and promoting the use of social media (20 percent). Perhaps unsurprisingly, Millennials and members of Gen Z were the biggest believers in promoting social media use (54 percent) while only six percent of Baby Boomers felt this would be an effective strategy.
Seventy-two percent of employees say that women’s leadership development is important and 57 percent say their organization currently had a female leadership development program in place.
Overall, 66 percent of financial services employees say they have sometimes suffered from workplace burnout. Women seemed to feel the burn more with 74 percent saying they had been burned-out as opposed to 59 percent of men. When it came to the reasons for burning out, unreasonable workload (32 percent); unreasonable performance expectations (26 percent); not being fairly compensated for work (24 percent); poor management (24 percent); and a negative workplace culture (22 percent) were the leading culprits.
Financial services remains a strong career choice but not as much for younger employees. Sixty-eight percent of financial employees are interested in remaining in the industry, with more than 25 percent stating that they are more interested in working in the technology industry. This is especially true for Gen Z and Millennial employees (39 percent) compared to Baby Boomers (22 percent).
Research findings are based on a survey conducted by Morar Consulting fielded across the U.S. between March 27-April 4, 2017. For this survey, 806 finance professionals were asked about their views on working in the finance sector. The study targeted finance professionals from C-level executives to employees across different age brackets and industry sectors. Respondents are recruited through a number of different mechanisms, via different sources to join the panels and participate in market research surveys. All panelists have passed a double opt-in process and complete on average 300 profiling data points prior to taking part in surveys. Respondents are invited to take part via e-mail and are provided with a small monetary incentive for doing so. Results of any sample are subject to sampling variation.