Are employees too intimidated for financial advice?
There is still a gap between the number of people who seek out professional financial advice and those who say they would like to meet with an adviser.
According to TIAA’s 2016 Advice Matters Survey, 48% of Americans have received professional financial advice but 71% say they are interested in it. That could be because many Americans believe they need a certain amount of money in their savings before it would be worth their while to speak to a financial adviser.
The survey found that nearly half of Americans think they need more than $50,000 in savings to justify meeting with a professional financial adviser, which opens up an opportunity for employers.
ebn“You don’t need a minimum amount of money to receive professional financial advice,” says Kathie Andrade, CEO of TIAA’s Retail Financial Services business. “An array of effective online tools and resources give everyone access to personal financial support. And finding a financial adviser early in your adult years — perhaps through your parents or employer — can help put you on a path for financial success.”
The survey was conducted by KRC Research online among 1,000 adults, 18 years and older living in the U.S.
The results underscored the need for people to seek advice when they are younger and just starting out in their careers. When asked at what age they thought they should first meet with a professional financial adviser, 59% of respondents said younger than 35, while 33% said between ages 35 and 54.
“Providing access to financial advice through the workplace not only can help employees at any income or savings level get valuable counsel, but it also may help employers recruit and retain top talent,” TIAA found. “Seventy-five percent of respondents say they would be more likely to consider a job if it offered no-cost financial advice as part of a benefits package.”
Plan sponsors should consider that when deciding whether to offer financial advice as part of their workplace benefits package, says Dan Keady, senior director, advice and planning strategy, at TIAA.
Respondents also said they were interested in receiving financial advice or education tailored to their life stage and gender.
“Those who went through the advice process were much more confident about their outcomes. They were more informed, more relieved and more calm,” Keady says. Sixty percent of those who received advice were confident and optimistic about their financial futures compared to just 35% of those who had not received advice.
It is important for plan sponsors to offer employees access to online tools and retirement calculators, videos and workplace seminars, experts say. Online chat functions are another option where employees can get their questions answered by a professional.
“If plan sponsors are not doing this, we see that many people are going to wait to get financial advice until a major life event happens,” Keady says. They wait for a death or a birth, instead of getting in there earlier, “which they just said was important.”
The respondents who did seek out financial advice say they wished they’d done it sooner.
“The survey opened my eyes to the value of advice in being competitive, especially with Gen Y folks,” Keady says. The earlier they get advice, the calmer they will be and the fewer financial worries they will have. When asked what freebies they would be interested in as part of a workplace benefits package, a high percentage said financial advice over things like a pass to a fitness center.
Parents who responded to the survey were more interested in college advice than advice about retirement.
“The reason I bring it up is it again shows why it is important for plan sponsors with a well-designed advice offering to include retirement and things segmented by age, such as educational planning and even some loans and things like that,” Keady says.
Twenty-two percent of people say they would not seek out advice unless they were sure the adviser was qualified to help them. Nearly 30% of respondents said they would be more likely to consider working with a professional financial adviser if they had a clear understanding of how they would be charged for that advice; and 24% wanted to receive a recommendation from friends or family members.
For plan sponsors considering offering a financial advice benefit to employees, the TIAA survey found that 12% would be more likely to consider working with a professional adviser if they had a list of items they could ask about; 13% said they would like to see material explaining what would happen as part of the advice process; and 15% were worried a financial adviser would be judgmental about their finances.
“That can be designed for workplace plans,” Keady says. “Here are the questions to ask and the materials explaining how the process works.”