Nearly half of Americans believe they need a sizable nest egg to justify working with a financial advisor, according to a new survey.
In fact, according to TIAA-CREF’s fourth annual Advice Matters survey, 45% of respondents think they need at least $50,000 in savings to merit that meeting – and, of those who have never received professional financial advice, nearly two-thirds (63%) citedå “I don’t have enough money to invest” as the reason.
Women who have not received professional financial advice are more likely (41%) to say the primary reason that they haven’t worked with a financial advisor is that they don’t have enough money to invest, while only 30% express the same sentiment. Additionally, less than a third (31%) of women say they have calculated the amount of money they will need to live comfortably in retirement, compared with 50% of men.
As for calculating how much they will need for retirement, men (56%) were more likely than women (43%) to have done so.
Action Steps
Working with an advisor did translate into positive action: 37% subsequently changed their asset allocation in their retirement plan, 36% increased the amount set aside in savings, and 32% monitored their savings more frequently, while 29% actually decreased spending. Nearly as many (28%) established a plan for paying off loans or managing debt.
Whether as a result of those actions, or the interaction with the advisor, the survey also found that respondents who have met with an advisor are significantly more confident in their retirement savings plan than those who have not (78% versus 43%).
Additionally, survey respondents who have discussed retirement with an advisor are much more likely to “run the numbers” and calculate how much income they will need in retirement – 79% compared with just 32% among those who have not met with an advisor. Nearly all of those who have met with an advisor have talked about a plan for turning their savings into monthly income upon retirement, and 58% have put that plan into action. However, more than half (55%) of respondents think they will need 75% or less of their current income in retirement.
Generation Gaffes?
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%). They may also be most in need of it, since 61% of Gen Y respondents think they will need 75% or less of their current income in retirement.
People often think that they will get financial advice by sitting down in the same room with an advisor – and, in fact, 88% of respondents report they find these face-to-face meetings to be valuable. But more than three-quarters (79%) say tools and calculators are valuable, along with:
- 72% - online articles
- 70% - brochures and other written materials
- 68% - videos
- 58% - online meetings using a chat function
The survey was conducted by KRC Research Aug. 3-10, 2015, via an online survey of 2,000 U.S. adults age 18 and older. The survey was not conducted among TIAA-CREF participants, and the survey questions and responses did not reference or concern any TIAA-CREF product, service or client experience.
How big an account do you think justifies an advisor’s expertise? Weigh in in the comments below.
