Retirement plan sponsors take note: Americans don’t particularly trust sources of financial advice, yet many say it’s something they need now more than ever.
Forty-eight percent of Americans say it is hard to know which sources of financial advice can be trusted, while 46% say that more than ever, they need a trusted place to go for financial advice, according to a recent survey of 1,000 Americans conducted by TIAA-CREF, a financial services provider.
Eric Jones, senior managing director, advisory services, TIAA-CREF, attributes the growing hunger for advice to demographics.
“I personally think that’s due to the demographic shift we’re seeing out there in America with boomers entering retirement, needing an assured source of income and really getting focused on the next phase of their lives,” he says.
Nearly 40% of individuals think advice is not something they can’t afford, according to the survey. They feel like “there’s something to it they can’t reach and achieve and, in fact, most individuals involved in retirement plans generally have advice available to them or certainly guidance,” says Jones. “So they’re not aware of what’s available to them.”
And more than one-third — 37% — says they don’t like talking to anyone about their finances. “Getting advice, particularly as you’re entering retirement, isn’t a do-it-yourself project,” says Jones. “There’s a fair amount of mistrust out there in terms of the advice they’re getting.”
The lesson for plan sponsors, he believes, is to use an outside third-party advice provider for retirement plan advice. “It sets the employer up so they can tell their employees they have an objective provider – it’s not them, it’s not the retirement plan provider,” he says. “The employees know that advice is objective and there’s not an agenda behind it.”
This year’s survey also found that women report less confidence in saving enough for retirement than men, with 56% of women saying they’re saving enough, compared to 65% of men.
“We know that as America ages the majority of financial responsibility will ultimately be with women, and so they’re starting to engage,” says Jones. “And as people engage more, they realize maybe what they didn’t know, so I’m hopeful that the lower confidence [women report] is really due to them getting more engaged.”
Generation X leads all age groups in seeking retirement advice, the survey reveals. Eighty percent of those between the ages of 35 and 44 who seek financial advice are looking for more guidance about how to prepare for retirement. Gen X is also the largest segment of the American population to rely on financial service provider websites or online tools for financial advice.
Among all age groups, Gen Y is the most likely to say that it’s a little or not at all informed about retirement planning, with 43% of those between the ages of 18 and 34 saying they lack adequate retirement planning information.
Those between the ages of 55 and 64 are the most likely segment of the population to act on the financial advice they receive some or most of the time. Fifty-three percent who received financial advice say they’ve increased their retirement savings contributions.
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