3 Reasons Why Retirement Savers Don’t Work with a Financial Advisor

Retirement plan participants who work with a financial advisor are more confident about their retirement preparation, yet survey results show that just 4 out of 10 participants use an advisor.

So why do 60% of participants indicate they are not working with an FA? According to a new OneAmerica online survey, there are wide misperceptions over affordability and applicability driving participants’ hesitancy. And the gender gap apparently is getting even worse.

On a positive note, the 40% of participants reporting that they work with an FA in the current results represent a 5% increase from a similar survey the firm conducted in 2013.

When asked why they were not working with an FA, survey participants indicated that they:

  • Are concerned they can’t afford fees (43%)
  • Believe they don’t have enough wealth (41%)
  • Haven’t seriously considered the issue (41%)

Still, those participants who work with an FA appear to “sleep better at night,” according to the report. “Our survey shows that those who work with a financial advisor also report having lower financial stress and higher knowledge on more retirement and financial-related topics,” explains Marsha Whitehead, OneAmerica vice president of enterprise marketing. “It is important for participants to understand this correlation and why working with a financial advisor, and having an advocate in their corner, may make financial sense.”

Gender Gap

Meanwhile, only 22% of women reported working with an FA, compared to 57% of men who took the survey. The results further show that women are less likely to work with an FA due to beliefs that they cannot afford the fees or they aren’t wealthy enough to work with one.

For men who choose not to work with an FA, the survey finds an inverse relationship, such that men don’t believe they need assistance or they are worried about potential fraud.

Not surprisingly, younger participants tend to indicate that they don’t work with an FA because they haven’t begun thinking about retirement preparation or they haven’t seriously considered the issue. But that could be changing, as the age of participants who work with an FA has been trending lower over the past five years. In 2013, the majority of participants who worked with an FA tended to be age 50 or older compared with the current study showing that participants who work with an FA tend to be age 35 or older.

The online poll was conducted from Aug. 25, 2017 to Jan. 31, 2018, with more than 12,200 OneAmerica retirement plan participants responding.

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