People who work with a financial advisor feel like they’re on much more solid ground than people who don’t when it comes to their ability to plan for retirement.
That’s one key finding of note from the Northwestern Mutual 2022 Planning & Progress Study, released this week.
The study explored levels of certainty across a broad range of factors—beyond just finances—and found people who work with an advisor feel like they’re on more solid ground across the board. When asked to rate their certainty levels on a scale of 1-100, the discrepancies were especially stark when it comes to the ability to plan for retirement.
Those who don’t work with an advisor answered 54.6 while those who do work with an advisor answered 77.5—a remarkable +22.9 increase in their confidence to plan for retirement.
That was second only to their ability to pay for an unplanned financial emergency, which scored 52.9 for those without an advisor and 77.6 for those with an advisor—a +24.7 increase. Ranking third among the biggest discrepancies was the ability to achieve long-term financial security (55.1/76.7/+21.6).
“Clearly, a range of factors impact the stability and certainty people feel in their lives,” said Tim Gerend, executive vice president and chief distribution officer at Northwestern Mutual. “But a good, trusted advisor can be an enormous help from a practical and emotional perspective, and that extends to people across all ages and circumstances.”
Another key finding of the study was that the majority (62%) of Americans say their financial planning needs improvement, but only a third (35%) seek help from a financial advisor.
The data also revealed a more near-term trend showing a significant number of people have recognized the value of getting help over the last two years. Nearly one in five (18%) U.S. adults say they didn’t have an advisor before the COVID-19 pandemic but now they either have started working with someone or plan to moving forward.
“There are some clear silver linings in these numbers,” Gerend said. “Despite the fact that too many Americans are still not getting financial help, we saw a spike last year in the number of people seeking professional advice and those numbers have held stable in 2022 rather than sliding back to pre-pandemic levels.”
There are also some encouraging signs in the data that younger adults are valuing professional advice. Three-quarters of Gen Z and Millennials say their financial planning needs improvement. However, they are the most likely among generations to say they didn’t work with an advisor before the pandemic but have since started doing so or plan to moving forward.
The study also revealed a difference in saving behaviors among people who work with an advisor versus those who go it alone. Eight in 10 (80%) people who get professional help say they were able to build their savings during the pandemic. Among people who do not work with an advisor, only half (49%) were able to save more.
The 2022 Planning & Progress Study was conducted by The Harris Poll on behalf of Northwestern Mutual and included 2,381 American adults aged 18 or older who participated in an online survey in February.
SEE ALSO:
• Plan Better, Sleep Better: The Benefits of Financial Discipline
• Americans More Confident with Financial Professional’s Help
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.
I love how you talk about the reassurance a retirement counselor will give you when it comes to your finances. My dad is reaching the age to retire soon and he wants to make sure all his finances are in order so retiring is a smooth process. We’ve been looking into going to a consultant to help us keep straight all the payments, insurances, and other finance complications he’s acquired throughout his life.