Offering Advisers to Participants Can Improve Financial Outlook

Findings from Northwestern Mutual’s 2019 Planning & Progress Study indicate more than six out of 10 Americans (62%) say their financial planning needs improvement.

Fifty-nine percent identify themselves as either disciplined or highly disciplined planners—an improvement over the 49% who said the same a year ago—and those who say they don’t plan at all is down to 11% in 2019, versus 14% in 2018.

While 64% of Americans agree there are likely to be more financial crises in the future, 20% say their retirement/financial plan has not been created to endure ups and downs in the market. In addition, nearly half (48%) report they don’t have clarity on how much they can afford to spend now versus how much they should be saving for later.

While Americans recognize that their financial planning efforts need improvement, few seek guidance from a financial professional—only 31% of U.S. adults work with an adviser, according to the study.

However, the Northwestern Mutual study shows the benefits of working with an adviser. Two-thirds of those who work with a financial adviser say they feel very financially secure, versus 31% of those who do not work with an adviser. Sixty-one percent who work with an adviser say they have clarity on balancing spending and saving for later, compared to only half of those who do not work with an adviser. Seventy-three percent of those who work with an adviser say they have a financial plan built to endure market ups and downs, while only 30% of those who do not work with an adviser say the same.

About two-thirds (67.9%) of retirement plan sponsors responding to the 2018 PLANSPONSOR Defined Contribution (DC) Survey reported they employ the services of a retirement plan adviser or institutional investment consultant. Of those, only 56.7% said their adviser provides one-on-one participant education.

However, 80% reported that financial/investment advice is offered to participants in their DC plans. Nearly half (47.2%) said it is offered via onsite meetings with an adviser outside of the plan, one-quarter said it is offered via a third-party provider independent from the plan recordkeeper, and 38.2% reported it is offered via proprietary services offered by the plan recordkeeper.

The 2019 Planning & Progress Study was conducted by The Harris Poll on behalf of Northwestern Mutual and included 2,003 American adults age 18 or older in the general population who participated in an online survey between February 20 and March 5, 2019.