Apparently, nerdy professionals good at math are intimidating. The median balance in 401(k) accounts is only $18,433, yet the Society of Actuaries finds only 50 percent of people meet with a financial advisor. Why? Because you’re really scary. Nearly three quarters (71 percent) of Americans report a fear of financial advisors, stating that some aspect of talking to a financial advisor scares them, according to a recent survey. from McAdam, the Philadelphia-based independent financial planning firm.
Among their fears, adults identified cost as the top concern with nearly half (49 percent) saying that they were scared that talking to a financial advisor will “end up costing me a lot of money.” The results of the survey point to a gap between the need for quality financial advice and the general comfort level Americans have when dealing with financial advisors.
“With the effects of the financial crisis still being felt today, some investors may be understandably wary of the financial planning process,” Michael McAdam, CEO of McAdam, said in a statement. “It’s important to recognize that meeting with an advisor can significantly improve your financial health. ”
“It’s particularly surprising that costs are the main fear since quality financial advice is often available to people at very reasonable costs–especially when compared to other services they routinely pay for,” added Phil Simonides, group vice president at McAdam. “Given the complex nature of long-term financial planning, investors should take a big picture view of the value they receive for these services.”
Nearly half (47 percent) said they were hesitant to trust a financial advisor with their personal financial information. More than four in 10 (41 percent) said they were concerned that a financial advisor would not be able to help them with their finances. Other findings included:
- Across the board, millennials tend to be more wary of financial advisors compared to those 45 and older. Fully 82 percent of those 18 to 34 said they were scared about some aspect of talking with a financial advisor. Only 63 percent of those 45 and older said they were scared about some aspect of talking to a financial advisor.
- Even those with higher incomes are concerned about the cost of meeting with a financial advisor. 44 percent of those with household incomes of $100,000 or more said they are concerned that talking to a financial advisor will cost a lot of money
- 38 percent said that they are fearful that a financial advisor will give them bad news about the state of their finances.
“Our fears are often not based in reality,” Simonides concluded. “Many financial advisors are neither expensive relative to their value, nor do they only provide the bad news some people fear. The only way for people to eliminate fear is to face it head on and take the initiative to have a meeting with a financial advisor.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
