Of the surveyed Americans who reported using a financial professional in the last five years, 85% said they did not check with a regulator regarding the background, registration, or license of a financial professional (15% did), according to the 2009 National Financial Capability Study.
Furthermore, many Americans don’t shop around to find a financial adviser. The study found that only a little more than half (56%) of those who have worked with a financial professional said that they typically met or talked with more than one adviser before making a choice. Interestingly, more young adults age 18-29 (66%) reported shopping around than those age 60 and older (43%).
More than half (55%) of the 1,488 respondents to the telephone survey reported asking advice from a financial professional in the last five years. That number was higher for household incomes of $25,000 to $75,000 (63%) and household incomes of more than $75,000 (73%). College graduates are much more likely than those who did not go to college to seek out advice from a financial professional (72% compared to 43%).
The breakdown of the types of advice all respondents sought out a financial professional for is as follows: savings or investments (32%); insurance of any type (32%); taking out a mortgage or loan (23%); tax planning (20%); and debt counseling (7%).
In keeping with the belief that women might need more insurance than men because they live longer, surveyed women were slightly more likely than men to seek advice about insurance (34% versus 30%).
The study illustrated the racial gap in receiving financial advice. Hispanics were the least likely to seek advice from a financial professional in the last five years (28%). Slightly less than half (48%) of blacks and more than half of whites (59%) and Asians (55%) sought advice.
Whites (36%) were more likely than other surveyed races to seek advice about savings or investments. Less than a quarter of both blacks and Hispanics sought advice about savings and investments, and 28% of Asians did so.
All respondents were somewhat more likely to agree that “financial professionals are too expensive for me” (40%) than to agree that “it is hard to find the right financial professional” (30%), according to the study. That was steady across all races, with Asians slightly more likely to report that financial professionals are too expensive (47%). Asians and Hispanics were more slightly more likely than blacks and whites to say it is hard to find the right financial professional.
Only a third of surveyed Americans said they would trust financial professionals and accept what they recommend, according to the survey. While it varied some, the percentage reporting trust in financial advisers stayed relatively steady across race, gender, incomes, education, and age.
The survey was fielded from May to July.