Amidst preparing for retirement, combatting high inflation, and keeping up with basic living costs, more Americans are seeking financial advice, reports new research from Betterment.
The firm’s 2024 Retail Investor Survey, which tracked data from 1,200 retail investors across Gen Z, Millennial, Gen X, and Baby Boomer generations, found that 34% of respondents have hired a financial advisor within the last year, as professionals continue to be a main source of advice for clients (40%).
Financial guidance has experienced a boom in recent years, Betterment reports, with 50% of those with an advisor having hired them between six months and two years ago. Meanwhile, a quarter of investors have worked with an advisor for over five years.
“In the face of lingering inflation and an uncertain election, investors of all ages continue to crave sound, long term financial advice,” said Sarah Levy, CEO of Betterment.
Other respondents were likelier to seek advice through social media. “Fin-fluencers,” or financial influencers, along with other social media mediums, were among the top three most trusted sources for 28% of respondents, up from 22% last year. This was especially prevalent among younger groups—61% of Gen Zers say they get their financial advice from social media, compared to 55% of Millennials, 27% of Gen Xers, and 9% of Boomers.
While effective in providing different outlooks, seeking financial guidance online could have its downsides, Betterment notes. “The advice you learn from online influencers or generative AI tools does not take into account the intricacies of your personal financial situation, including how various factors such as income, debt, and expenses will change over the course of your life,” writes Dan Egan, vice president of Behavioral Finance and Investing at Betterment, in the research. “Although these platforms can offer a ‘quick fix’ to consumers looking for entry-level guidance, the value of face-to-face interactions, tailored advice, and the assurance of professional accreditation and fiduciary responsibility create a foundation of reliability and confidence that online forums simply can’t replicate.”
Tracking interest rates
Investors are turning to advice as more track interest rates and take note of the overall market environment. More than three-quarters (78%) of investors say they pay attention to rates. As a result of higher rates, more have increased their savings to high-yield accounts (50%), cash holdings (42%), crypto holdings (30%), or have invested in crypto for the first time (10%).
If interest rates were to fall anytime soon, 47% say they would prioritize earning more income, while 46% would reduce their spending and 41% say they would “beat inflation.” Just 11% would decrease their high-yield savings, with a majority (41%) holding steady.
… And the upcoming election
Along with keeping a close eye on the market, investors are also monitoring the upcoming general election in November. Smaller numbers are anticipating moving or pulling investment funds based on the outcome.
According to the research, 20% of respondents are likely to change their investment funds if President Joe Biden wins a second term, while another 20% say they would do so if former president Donald Trump wins. Fourteen percent say they will move funds regardless of who wins the seat.
Over half of Millennials (54%) and Gen Z (56%) say they are likely or very likely to pull their investment funds for a Biden win, compared to only 25% of Gen X and 26% of Boomers. Younger generations and Boomers claim to be just as likely to pull their money if Trump wins compared to Biden, whereas Gen X is significantly more likely to change their investments with a Trump presidency, according to Betterment.
When considering the potential impact the upcoming elections could have on their finances, 47% of respondents cited high inflation as their biggest concern, followed by taxes increasing (44%), the potential for a recession (40%), and a stock market crash (31%).
“While we can expect the markets to react to the upcoming political cycle, investors aren’t planning on letting the coming elections affect their portfolio allocations, long-term investments, and timeline for major financial decisions for the most part,” added Egan in the research. “Only time will tell whether this holds true, particularly as the elections get closer in the second half of the year, but it’s a good signal that investors aren’t planning to react emotionally.”
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
