How Much Difference Does an Advisor Make?

A new survey finds an impressive retirement preparations gap among those who use the services of a financial advisor.

In fact, according to a new survey by John Hancock Retirement Plan Services, those who work with a financial advisor double their retirement preparedness, and were more than twice as likely to be saving the maximum within a 401(k) plan (28% of those surveyed who have an advisor were saving the maximum allowed by law, versus 13% who do not).

The new data, part of John Hancock’s 2015 Financial Stress Survey, show that of the people surveyed, 70% of those who work with a financial advisor are on track or ahead in saving for retirement, versus 33% of those not working with an advisor.

Better ‘Behaved’?

Among those who have an advisor, more than a third had determined how much to save for retirement and half had contributed to an IRA; for those without an advisor, only 14% knew how much they’d need for retirement and a mere 16% had contributed to an IRA, according to the survey.

The survey also found that 58% of people with an advisor had saved for emergencies, compared with 26% of people who don’t have an advisor.

In 2013, the nonpartisan Employee Benefit Research Institute (EBRI) quantified the impact advisors (and online calculators) had on retirement readiness. Specifically, EBRI found that for those in the lowest relative income quartile, the increase in the modified Retirement Readiness Rating (RRR) value — that is, the betterment in their likelihood of having established an adequate retirement target — ranged from 9.1 to 12.6 percentage points. Among those in the highest relative income quartile, the increase in modified RRR values ranged from 6.3 to 11.0 percentage points.

John Hancock Retirement Plan Services’ annual Financial Stress Survey polled more than 2,000 retirement plan participants in the summer of 2015. The survey was commissioned by John Hancock and conducted by Greenwald and Associates. The data is exclusive to the experience of John Hancock’s mid/large market retirement plan clients.

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