Americans who work with financial advisors demonstrate higher levels of retirement readiness, disciplined planning and financial confidence than those who don’t, according to a new study.
Northwestern Mutual’s 2018 Planning & Progress Study – an annual research project that explores Americans’ attitudes and behaviors toward financial decision-making – finds that nearly 7 in 10 (67%) survey respondents who use a financial advisor believe they have “clarity” on how much to spend now and save for later, compared to less than half (44%) of those without an advisor.
Individuals without an advisor, however, are more than twice as likely as people with an advisor (34% versus 13%) to say they are “not at all confident” they have the correct balance between spending and saving. This may be one reason why those without an advisor are more likely than those with an advisor (60% versus 37%) to point to debt reduction as a top priority, the study notes.
Meanwhile, 75% of respondents with advisors consider themselves “disciplined” or “highly disciplined” financial planners, compared to just 37% of those without an advisor. In addition, more than 7 in 10 people with an advisor said their financial plan has been created to endure market cycles, while less than a third (29%) of those without an advisor said the same.
The study further reveals that a majority of those who use an advisor believe that, if they work past traditional retirement age, it will be by choice rather than necessity – 59% compared to 41%. Not surprisingly, the opposite is true for those respondents without an advisor, with 61% expecting to remain employed past retirement age from necessity.
Relationships Matter
While the findings draw attention to the overall value of working with an advisor, the authors also discerned that not all advice is created equal. Survey respondents cited several attributes that distinguish a “remarkable” advisor experience from one that is merely “acceptable."
“Someone I can fully trust to have my best interests at heart/not just out to sell product” emerged as the leading priority (57%) among respondents, followed by:
- "Not feeling judged on size of assets/financial decisions" (36%)
- "Deep expertise across a wide range of financial solutions and strategies" (33%)
- "Personalized attention because they remember every detail of my situation" (24%)
- "Flexibility to connect that works best for my needs and schedule by combining direct access to an advisor with digital tools" (24%)
- "Makes me feel like financial planning is not an all-or-nothing proposition where I can never deviate from my plan" (21%)
The importance of relationship also resonated in preferences around the delivery of advice. According to the findings, 60% of respondents said a human relationship combined with technology is ideal, while only 11% opted for a fully automated solution.
Conducted by Harris Poll on behalf of Northwestern Mutual, the 2018 study included 2,003 American adults aged 18 or older who participated in an online survey March 7-19, 2018.
