Financial planning? 66% of Americans say it needs big improvement
Gen Zers and millennials, who spend significant time on social media, were not turning to those channels for financial guidance, but were more likely than other generations to turn to a financial advisor for help, says a new study.
Although two-thirds of Americans agree that their financial planning could use some improvement, only 37% currently work with a financial advisor.
“Financial uncertainty is up in 2023, and the question for many Americans is what to do about it,” said Tim Gerend, chief distribution officer for Northwestern Mutual. “The good news is many are taking action to plan and tapping advisors for help in an increasingly complex financial environment so that they can reach their goals.”
Advisors can help close the gap by demonstrating the value and peace of mind they offer, the company’s 2023 Planning & Progress Study found. The research shows that people who work with an advisor have significantly higher levels of confidence in several areas, including:
- Being prepared for unplanned expenses (31 percentage points higher);
- Being able to retire when the time comes (29% percentage points higher); and
- Achieving long-term financial security (28 percentage points higher).
“When Americans ground their financial future in a custom-built plan and an expert advisor instead of in their own gut feelings, the confidence boost can be tremendous and the improved financial outcomes can be just as significant,” Gerend said. “Financial advisors can help people in so many ways they might not realize — managing debt, building and protecting wealth, estate planning and more.”
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Two leading reasons why people turn to advisors for financial guidance are for their professional expertise and to help them maintain a long-term view that keeps them on track to achieve goals, both at 48%. Gen Zers and millennials prioritize advisors who align to their values, save them time and keep them up to date on things such as changes to the tax code.
Additionally, when selecting an advisor, respondents said they prioritize someone who understands their life stage priorities (54%) and who has a long track record of experience (51%). When looking across generations, however, priorities begin to differ. Gen Zers and millennials, for example, place a higher premium on working with an advisor who is tech-forward and demographically similar to them.
“What we know is that people form long-term relationships with their advisors lasting 20, 30 or 40 years, and it’s clear that younger generations are expecting empathy just as much as they’re expecting financial expertise,” Gerend said. “For someone to feel comfortable sharing their dreams and worries with an advisor, there needs to be a human connection rooted in trust and understanding, and that’s something our industry should continue prioritizing.”