Right Advice Can Be a Struggle

Almost half the respondents (48%) in TIAA-CREF’s second annual Financial Advice Survey said it is hard to know which sources of financial advice can be trusted.

Key findings from the survey show Americans’ lack of trust and comfort in discussing financial advice. The survey also pointed to perceived cost and lack of time as additional factors preventing individuals from seeking advice.

“One of the things that came up is that people are struggling to find trusted advice,” Dan Keady, director of financial planning at TIAA-CREF, told PLANSPONSOR. “That 48% is a big number. More than ever, people are saying they need trusted advice.”

About a third of survey participants said they don’t like talking to anyone about their finances. Add to this the average person’s time-squeezed life, and the perception that good financial cost is prohibitively expensive, and seeking advice becomes even more of a challenge. Keady pointed out that about a third of respondents said they did not have enough time to get proper financial advice, and two-fifths said they believed good financial advice would cost more than they can afford.

Some results were encouraging. People are saving for retirement and beginning to focus on how to manage and leverage assets in retirement. The recent survey found 63% of people who received financial advice sought information on saving for retirement, compared with 52% a year earlier.

Advisers could see growing interest in annuitization, Keady said, and advisers who want to ensure their conversations with plan participants are relevant should also be prepared to give advice on saving to meet health care expenses in retirement. “Those two things will drive conversations going forward,” Keady said. “We’re starting to see more and more people asking about these needs.”

Fifty-four percent of respondents who received advice said they were looking for information on how to make retirement savings last, up from 43% in 2012. “Many people have focused for a long time on saving for retirement,” Keady said, “but at some point you have to convert that savings into an income you can’t outlive. This is a growing trend, and a very important one.” People are also beginning to ask for more advice about planning for medical expenses in retirement, he said, with nearly half (43%) in 2013, compared with 35% a year earlier.

Education a Priority

This year’s survey showed an uptick in the number of people seeking advice with some education tie-in, whether it was saving for education or addressing student loans, from 30% in 2012 to 40% in 2013. Even the group of respondents age 55 to 64 showed a rise in people interested in managing student loans, Keady said.

Unsurprisingly, the survey found that advice and tools designed specifically for different groups hold appeal. Four in 10 respondents seeking advice use financial service provider websites or online tools to find information—an increase of more than 15 percentage points from a year ago. About half also said webinars (47%), live seminars (46%) and the ability to interact with someone online (45%) would be helpful ways to receive financial advice.

The crucial factors are how important it is for people to have access to advice. “The flip side is that people who find advice they trust are much more likely to act on it,” Keady said. “This dovetails with what we’ve seen at TIAA-CREF. More than two-thirds of our participants who have in-person advice take action. They save more; they rebalance; they look at asset-allocation strategies.”

Keady pointed out that advice does not have to be face to face. More than 50% of participants who received advice through a website took positive financial action. The rise in people using websites and online tools could be attributed to the increased use of handheld mobile devices.

The survey pointed up the importance of creating advice that is readily accessible on a website, and knowing the population—Generation X—that is most interested in getting advice through Internet sites and online tools.

The key takeaway, Keady said, is that if people find information they trust and it’s not too costly—such as workplace advice or online tools and sites, they can take action to prepare adequately for retirement.

Jill Cornfield