Advisers Say Americans’ Savings Problems Self-Imposed

According to financial advisers, the largest impediments to Americans’ financial security are self-imposed.

A survey from the Principal Financial Group found advisers said the top three roadblocks to Americans’ financial security are living beyond ones means (70%), not saving enough (66%), and fear (62%). Rounding out the top five were not saving for retirement early enough during working years (56%) and reluctance to take financial action (55%).

As for how much people should be saving in order to have enough money in retirement, on average, advisers indicated their clients should be saving around 17% of their pay. One quarter of advisers said their clients should be saving 10% of pay, 30% suggested savings of 15% of pay, and 29% of advisers said clients should be saving at least 20% of pay in order to have enough money in retirement.

When asked what the number one factor was that has impacted their clients’ overall financial well being in the last decade, the largest number of advisers (29%) said it was the Dow Jones Industrial Average dropping below 7,000 points in March 2009. Also cited by about one-fifth of advisers each were the collapse of Lehman Brothers in September 2008 (22%) and the real estate market decline (20%).

However, when employees and retirees were asked this question in a recent Principal Well Being Index survey at the end of 2009, Principal said they were most likely to say it was the price of gasoline in September of 2008.

In order to help clients get back on track, advisers are telling clients to pay down debt (72%), increase retirement savings (65%), increase emergency fund savings (57%), spend less money (57%), and talk with their financial adviser more often (56%).

Furthermore, advisers are connecting with clients more actively. Eighty-one percent of advisers are touching base with clients on a regular basis to help them deal with increased financial worry brought on by the downturn in the economy; 71%are providing reassurance to ward off stress; and 65% are helping clients create a financial plan to help them deal with recent financial stress brought on by the downturn in the economy.

The survey, commissioned by the Principal Financial Group and conducted by Harris Interactive, included feedback from a nationwide sample of 650 producing financial advisers, including independent broker/dealers, wirehouse and regional brokerage firms, insurance agencies, independent wealth management firms, banks, and independent asset management firms.