Data and Research

Americans Without Advisers Are Far Less Prepared for Retirement

Most Americans have never hired a financial planner and most say they don’t have enough money or assets to warrant working with one.

By Javier Simon editors@strategic-i.com | March 28, 2017

Americans working with financial advisers seem more financially prepared and confident about facing complex investing topics than their counterparts managing finances on their own, according to the latest survey report from the Million Dollar Round Table (MDRT).

The survey found that the majority (79%) of Americans have never hired a financial professional. Of these people, less than half, or 46%, have a retirement plan or emergency fund. Even fewer (19%) have a long-term financial plan. These stats, however, shift when considering those who have hired financial advisers. For this group, 77% have a retirement plan or emergency fund and 50% have a long-term financial plan.

Not surprisingly, knowledge of complex financial terminology varied among both groups, although those working with financial advisers were in general more knowledgeable. Americans who have hired a financial professional report feeling more confident that they understand complex financial topics, such as “long-term care insurance” (41% are confident), “Roth IRA” (69%) and “annuities” (49%). Those stats dip for Americans who haven’t hired a financial planner. This group feels less confident about terms like “long-term care insurance” (31%), “Roth IRA” (42%) and “annuities” (28%).

“These results further emphasize the importance of planning for a healthy financial future,” says Mark J. Hanna, MDRT president. “Consider working with an adviser like hiring a professional builder to renovate your home. While you may be able to paint the walls on your own, your overall knowledge wouldn’t enable you to replace your pipes or build new cabinets in your kitchen.”

Still, roughly half of those without the help of financial advisers feel confident about basic financial terms such as “life insurance” (51%) and “401(k)” (52%). The survey found that about 77% of employed Americans say their company offers a 401(k) or pension program. However, 29% of those who could are not participating. That number climbs to 36% for workers ages 18 to 34.

When asked why they’ve never hired financial professionals, 44% said “I don’t have enough money or assets to need one.” According to the study, 28% of these respondents made at least $75,000 a year. Other reasons include, “I’m capable of managing my own finances” (38%), “It would cost too much money” (36%), “I don’t know what type of planner to hire” (14%), and “I don’t see the value in traditional financial planning” (10%).

“Working with a financial professional gives you a resource for deeper understanding of financial terminology and planning capabilities, ensuring you protect yourself and your family with a well-rounded plan,” Hanna concludes.

MDRT is an international network of insurance and investment financial services professionals. This survey was conducted online by Harris Poll among more than 2,000 American adults during February 2017. 

View MDRT's full study results to learn why consumer confidence in financial planning is key