They say money can’t buy happiness, but not worrying about money seems to put a nice down payment on it. Now if only more people would start working with a financial advisor, you’d have a lot more happy, confident people around.
According to the latest findings from Northwestern Mutual’s 2019 Planning & Progress Study, an overwhelming 92% of U.S. adults aged 18+ agree that nothing makes them happier or more confident in life than when their finances are in order.
Despite the link between financial stability and emotional well-being, the majority of Americans have room for improvement when it comes to their financial planning. While there are some signs that behaviors are trending in the right direction, a gap continues to exist between intent and action:
- More than six out of 10 Americans (62%) say their financial planning needs improvement, which is down from the 70% who said the same in 2018
- 59% identify themselves as either disciplined or highly disciplined planners, which is an improvement over the 49% who said the same a year ago
- 30% haven’t spoken to anyone about financial planning, an improvement from the 34% who said the same a year ago
- While 64% of Americans agree there are likely to be more financial crises in the future, 20% say their retirement/financial plan has not been created to endure ups and downs in the market
- Nearly half (48%) report they don’t have clarity on how much they can afford to spend now vs. how much they should be saving for later
“We see something of a classic disconnect between theory and practice in these numbers,” said Tim Gerend, executive vice president, career distribution at Northwestern Mutual. “While there is near unanimous acknowledgment that getting one’s financial house in order is good for our mental health, breakdowns occur when it comes to taking action. That said, it’s worth noting that some progress has been made year-over-year. Hopefully that’s a trend that not only continues but accelerates.”
Advisor usage still low, but benefits run high
While Americans recognize that their financial planning efforts need improvement, few seek guidance from a financial professional. Less than one-third (31%) of U.S. adults work with an advisor, which is flat to the proportion of the population who said the same last year.
However, the benefits of seeking professional help come across distinctly in the data. Those who work with advisors report substantially greater financial security, confidence and clarity than those who go it alone:
- 66% of U.S. Adults “feel very financially secure” with a financial advisor compared to 31% without a financial advisor
- 85% “feel as if they’re headed in the right direction” with a financial advisor compared to 71% without
- 71% “are happy with their life” with a financial advisor compared to 50% without
- 61% “have clarity on balancing spending now vs. saving for later” compared to 50% without
- 81% “set specific goals for the next 5-10 years” compared to 67% without
- 68% “are confident they will achieve their goals in the next 5-10 years” compared to 55% without
- 73% “have financial plans built to endure market ups and downs” compared to 30% without
“Too often, people assume that advisors are for people who have either achieved a certain level of wealth or have a complex financial situation,” said Gerend. “We remind people every day that the road to financial security starts with having a solid financial plan, and the road to a plan starts with having an advisor you trust who can give you the confidence you need to take action. The most important part is getting started, and it’s never too early to do that.”
The 2019 Planning & Progress Study was conducted by The Harris Poll on behalf of Northwestern Mutual and included 2,003 American adults aged 18 or older in the general population who participated in an online survey in 2019.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
