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.
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