Nearly half of Americans (45%) believe they need at least $50,000 in savings to warrant financial advice, according to TIAA-CREF’s fourth annual Advice Matters survey. The anxiety over the cost of access to financial advice is widespread, and 63% of survey respondents who have never received professional financial advice said lack of funds was the reason.
However, the survey also found that respondents who have met with an adviser are significantly more confident in their retirement savings plan than those who have not (78% versus 43%)—a strong motivation for Americans to seek financial advice regardless of how much they have saved.
Everyone has a financial goal—paying off student loans, purchasing a new home or making sure loved ones are taken care of—notes Kathie Andrade, executive vice president and president, Individual Advisory Services at TIAA-CREF. Financial advice benefits everyone, no matter where they are in their savings journey, because engaging an adviser makes it more possible to meet goals.
Advisers help people stay on track and adjust when needed, Andrade points out. Positive financial behaviors of respondents who have received professional financial advice include: changing their asset allocation in their retirement plan (37%), increasing the amount set aside in savings (36%), decreasing spending (29%), monitoring savings more frequently (32%) and establishing a plan for paying off loans or managing debt (28%).NEXT: When it comes to men, women and advice—a stark difference
Gender plays a significant role in who seeks and gets financial advice. Though 49% of all respondents report they have received financial advice, more men (56%) than women (43%) have reached out to an adviser. Women who have not received professional financial advice also are more likely (41%) to say the primary reason that they haven’t worked with a financial adviser is that they don’t have enough money to invest, while only 30% of men say inadequate assets are the reason. Just 31% of women say they have calculated the amount of money they will need to live comfortably in retirement, while 50% of men have done so.
Gen Y respondents are the least likely to have received professional financial advice (42%) among all generations, but they also are the most interested in receiving advice in the future (83%). And considering 61% of Gen Y members think they will need 75% or less of their current income in retirement, financial advice may help them adjust their expectations and ensure their savings are adequate to support a retirement that could last 20 years or more.
Working with a financial adviser may also help Americans set an accurate target for retirement income. Survey respondents who have discussed retirement with an adviser are much more likely to run the numbers and calculate how much income they will need in retirement—79% versus only 32% who have not met with an adviser. Nearly all who have met with an adviser have talked about a plan for turning savings into monthly income upon retirement, and 58% have put that plan into action.
Although many experts recommend individuals target 70% to 100% of pre-retirement income to maintain their standard of living in retirement, 55% of respondents think they will need 75% or less of their current income in retirement. This could put these individuals at risk to outlive their savings.NEXT: Debunking myths about financial advice
Another common misconception: Many believe financial advice is necessary only as retirement approaches. But survey respondents indicated that other life events may motivate them to pursue advice, such as receiving an inheritance (52%), preparing to purchase or sell a home (40%), a decrease in household income (32%), divorce (30%) or a promotion or increase in compensation (30%).
People often think that getting financial advice means sitting down in the same room with an adviser, and 88% of respondents report they find these face-to-face meetings valuable. But Americans also recognize that advice can be delivered effectively through other channels.
Seventy-nine percent rate tools and calculators as valuable, along with online articles (72%), brochures and other written materials (70%), videos (68%) and online meetings using a chat function (58%). Eighty-one percent say it would be helpful to get online financial advice specifically designed for their age group to ensure they have guaranteed income in retirement.
KRC Research surveyed 2,000 U.S. adults age 18 and older, who were not TIAA-CREF participants, between August 3 and August 10. The survey questions and responses did not reference or concern any TIAA-CREF product, service or client experience.
More data from the “Advice Matters” survey is on TIAA-CREF’s website.