A new survey finds that those who use an advisor are more likely to feel overwhelmed by retirement investment choices than those who don’t. Not surprisingly, they are less likely to be satisfied.
Of course, some of that could be the result of a knowledgeable advisor making them aware of options they wouldn’t otherwise. Still, Scottrade’s 2017 Retirement Study finds that more than half (52%) of those with access to that guidance are overwhelmed, compared with 42% overwhelmed who don’t have that support. Those who are overwhelmed are more likely to be working with a financial advisor (67% vs. 58%), but less likely to be “very” satisfied with how their advisor is handling their investment assets (41% vs. 54).
Perhaps of greater concern is that 43% of those who use an advisor say they don’t always understand why they have the retirement investments that they do (43%) and feel their advisor sometimes recommends products and solutions that are in their advisor’s own best interests (44%), the latter perhaps an outgrowth of all the negative headlines colonies of termites and such in the aftermath of the fiduciary regulation proposals, in addition to legitimate concerns.
About half of U.S. investors (48%) (especially Millennials and Gen Xers) admit they are overwhelmed by all the investment choices that are available, and a majority (61%) wish they had access to reliable guidance.
Trust Issues?
Younger cohorts (Millennials and Gen Xers) are far more likely than their older peers to express hesitation and cynicism about the choices their advisors make on their behalf and are more likely to wish for advice they can trust. And Gen Xers stand out as the least likely age cohort to feel “very” satisfied with their advisor. Younger investors are more likely to:
- Wish they had access to trustworthy retirement investment guidance (80% Millennials and 72% Gen Xers vs. 49% Boomers and 40% Seniors)
- Feel overwhelmed by all of the retirement investment choices that are available (62% Millennials and 53% Gen Xers vs. 42% Boomers and 31% Seniors)
- Not always understand why they have the retirement investments they do (57% Millennials and 52% Gen Xers vs. 31% Boomers and 28% Seniors)
- Feel their advisor sometimes recommends products and solutions that are in their advisor’s own best interests (67% Millennial and 64% Gen Xers vs. 22% Boomers and 15% Seniors)
Confi-‘Dents’
Not surprisingly, being overwhelmed by the investment landscape has a direct (and negative) impact on investor confidence and satisfaction. Almost half (48%) of investors say they feel overwhelmed by all of the retirement investment choices that are available. These investors are more likely than investors who are not overwhelmed to:
- Say they don’t spend much time on their retirement accounts (71% vs. 37%)
- Say the fees they pay for retirement investments are not worth the service they get (58% vs. 21%)
- Say they wish had access to trustworthy retirement investment guidance (78% vs. 46%)
- Be less confident that they will have enough money in their retirement account when they retire (26% vs. 39% “extremely” confident)
- Feel they won’t ever be able to retire (41% vs. 8%)
- Say they don’t always understand why they have the retirement investments they do (64% vs. 21%)
Those issues notwithstanding, the survey found that nearly two-thirds (62%) of investors are working with a financial professional to help them plan for retirement, and nearly half (47%) of these investors say they are “very” satisfied with the way their financial advisor has managed their retirement assets, with another 43% “somewhat” satisfied. Said another way, 90% are satisfied.
Scottrade’s Retirement Study was conducted online from Jan. 4-17, 2017. The survey was conducted by Harris Poll among a nationally representative sample of 1,030 adults in the U.S. aged 18 and older who are involved in investment decisions for their household and have $2,500 or more in investments with a full-service brokerage company, online brokerage company or independent financial advisor.
