Americans with an advisor expect to retire at age 64, which is a full two years sooner than Americans who don’t work with an advisor. They also have saved twice as much money for retirement than those who do not have an advisor: $132,000 vs. just $62,000.
These are among the key findings released today from Northwestern Mutual’s 2024 Planning & Progress Study, which is heavily focused on the tangible benefits of working with an advisor vs. going it alone.
“Americans who work with a financial advisor have better financial habits, superior outcomes, less anxiety, greater confidence and more time to live the life of their dreams,” said John Roberts, chief field officer at Northwestern Mutual. “The impact isn’t just about bigger numbers on a spreadsheet—it’s about more days in retirement and more time enjoying the journey.”
The study found three in four Americans with an advisor (75%) believe that they will be financially prepared to retire, compared to just 45% without an advisor who feel the same. Nearly two in three Americans with an advisor (62%) say they know how much they need to save in order to retire comfortably, while about one in three without an advisor (34%) agree. Americans with an advisor also predict that they will pay off their student loan debt three years sooner: at age 43 instead of age 46.
An earlier release of information from the Planning & Progress Study back in April revealed that U.S. adults believe they will need $1.46 million to retire comfortably, a 15% increase over the $1.27 million reported last year, far outpacing today’s inflation rate which currently hovers between 2% and 3%.
Millionaires with advisors feel more financially secure
The latest findings from the comprehensive study show the impact of financial advice from an expert advisor is evident even among high-net-worth individuals. Of Americans with at least $1 million in investable assets, those with an advisor expect to retire a year sooner (61 vs. 62), and are more likely to believe they will be financially prepared for retirement than millionaires who lack an advisor (92% vs. 77%, a 15 percentage point difference).
“The research shows that accumulating wealth isn’t enough; people need expert advice to follow best practices, feel more secure, and reach their dreams faster,” Roberts said. “Half of wealthy Americans who don’t have an advisor don’t have a will—but 81% who have an advisor have that essential estate planning document in place. That stat alone should send a clear message about the value of an advisor: they ask deeper questions, give better solutions, and help ensure people are financially prepared.”
Millennials calling on advisors earlier
Among Americans who have a financial advisor, the average age this relationship began is 38. Interestingly, younger generations are engaging experts for financial advice earlier and earlier.
“Younger generations are saving, investing and seeking advice earlier than ever.”
Northwestern Mutual’s John Roberts
The average Millennial with an advisor says they sought formal financial guidance at age 29—nine years sooner than Gen X (age 38) and a full 20 years before Boomers+ (age 49). Interestingly, 29 is also the average age when Americans get married, while the median age when a mother has her first child is age 30.
“Younger generations are saving, investing and seeking advice earlier than ever,” Roberts said. “This can be transformational, because they will have more time to benefit from being in the market and the power of compound interest. Many wait for a life event like a wedding or a new baby to start planning with an advisor. It’s important to remember, though, that the sooner you get started with a financial plan, the better your long-term results.”
Advisors most trusted source of financial advice
Once again, people across the U.S. say they trust financial advisors more than any other source for financial advice. More than twice as many Americans chose financial advisors (33%) over family members (16%), who ranked second. Interestingly, financial advisors were selected eight times more than online financial influencers and social media sites like Reddit and TikTok (4%).
Gen Z was the only generation to perceive family members as the most trusted source of financial advice, followed closely by financial advisors.
“FinTok may pique people’s interest, but to make the most of their money, Americans are turning to expert financial advisors to reveal their opportunities and their blind spots,” said Roberts. “The research also shows more parents are interested in inviting their young adult and teenage children into annual meetings with their financial advisors. This credible combination of parents and financial advisors could be a game-changer, helping families instill planning knowledge and a lifetime of good financial habits with the next generation.”
3 in 10 seeking an advisor now
Northwestern Mutual’s study found that seven in 10 Americans believe their financial planning needs improvement, and many are taking action. Nearly three in 10 Americans (29%) who did not have an advisor before say they plan to start working with one—or have just recently started working with one.
“Financial advisors and comprehensive financial planning have never been more relevant or in-demand,” Roberts said. “In this time of record-high financial anxiety, Americans are proactively seeking out expert advice for peace of mind.”
Closing the racial wealth gap
While the research shows financial advice can be impactful for all Americans, among Black Americans, the influence is even more pronounced.
Northwestern Mutual’s study found that Black individuals with an advisor expect to retire three years sooner (age 61 vs. 64). They also have almost three times more in retirement savings on average than African Americans who do not have a financial advisor ($71,000 vs. $26,000). They also expect to pay off their college debt five years earlier (by age 41 vs. 46).
“Our industry’s role in closing the racial wealth gap is crystal clear. Financial advisors make an incredible impact in people’s lives, and in the years ahead, we need to press even harder to grow our sphere of influence, and help more Americans access and build financial security,” Roberts said.
Northwestern Mutual’s 2024 Planning & Progress Study was conducted in January 2024 by The Harris Poll on behalf of Northwestern Mutual among 4,588 U.S. adults aged 18 or older.
SEE ALSO:
• $1.46 Million: New ‘Magic Number’ for a Comfortable Retirement
• 7 Standout Facts from ‘Retirement Research Week’
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.
