The number of Americans interested in financial advice increased, to 35% from 24% in a 2013 survey, TIAA-CREF found in its third annual “Financial Advice Survey.” But even with this 11-point increase, 65% of people still say they are not interested in receiving financial advice—a precarious situation, TIAA-CREF notes, considering the majority of Americans are underprepared for retirement.
Many people who are not interested in advice may simply not understand the benefits, or what advice includes. Only 57% of individuals who are not interested in receiving financial advice are aware that it can include specific recommendations about investing, while 82% of people who are interested in advice are aware of this fact. The findings reveal that people are more and more concerned about retirement: Of those who did receive advice, 86% sought out retirement-related advice, up from 81% last year and 71% in 2012.
As people get older, their interest in retirement-related advice increases, says David Ray, managing director, head of institutional retirement plan sales at TIAA-CREF. “This year’s survey shows that 80% of Gen Yers (ages 18 to 34) who sought advice are interested in retirement-related advice,” Ray tells PLANADVISER, adding that the numbers rise with the age of the respondent: to 90% for those ages 35 to 44, and 92% for survey respondents ages 45 to 54. Interest dips slightly, to 90%, for respondents ages 55 to 64, before a larger drop, to 78% for those age 65 and older.
The survey found two-thirds of Americans who have received financial advice feel optimistic about their finances, and 86% act on financial advice after they receive it. Sixty-two percent of respondents report changing their spending habits after receiving financial advice, and 46% increased the amount they contribute to their retirement.
Other positive behaviors that survey respondents reported after receiving advice include making a plan for paying off loans (53%) and establishing an emergency fund (52%).
Misconceptions As Roadblocks
A range of misconceptions can come between investors and financial advice, the survey found. Distrust is on the rise, with 64% of respondents saying it’s hard to know which sources of advice can be trusted, up 16 percentage points from last year. Respondents also called out several other obstacles to obtaining advice, including:
- 44% think good financial advice will cost more than they can afford;
- 39% say the information available does not meet their individual needs;
- 35% say it’s hard to find the time to look for financial advice; and
- 32% are not sure what questions to ask.
Many popular misconceptions about financial advice are just that: misconceptions, points out Eric Jones, senior managing director of advisory solutions at TIAA-CREF. “Unfortunately, they can paralyze people’s search for trustworthy advice, leaving many people disengaged with their financial futures,” Jones says. “There are many reliable, affordable sources for high-quality financial advice—including, for many people, their employer.”
About half (52%) the survey respondents say the availability of no-cost financial advice in a benefits package would have an impact on their decision to accept a job offer.
“Those who aren’t interested in advice may not know what it includes or how valuable it can be,” Jones says. “Sound advice begins with the adviser’s deep understanding of your situation and your financial needs and goals. Based on that, the adviser can provide recommendations on how much to save, how to diversify investments, or what financial solutions make sense for your situation. Building a relationship over time with an adviser who knows you and your financial needs can help you navigate changes over the course of your life.”
TIAA-CREF’s third annual Financial Advice Survey was conducted by KRC Research, an independent research firm, and polled a random sample of 1,000 adults nationwide by phone between July 28 and August 7 to assess their attitudes, preferences and behaviors about receiving financial advice.
More information can be found in the executive summary of TIAA-CREF’s study, which can be downloaded here.