A new study has revealed that a majority of Americans have never hired a financial planning expert. This lack has resulted in less familiarity with terms like annuities, long-term care insurance, etc. People without an expert guidance also run a greater risk of not having sufficient retirement benefits funds. The study also discussed reasons for not hiring an expert and found a lack of enough money, self-confidence and high costs to be the key barriers.
Study Says Majority of Americans Never Hired a Financial Planning Expert
The study which says a majority of Americans have never hired a financial planning expert was commissioned by Million Dollar Round Table (MDRT). The key result of the study was that about 79 percent of Americans have never even hired a financial planning expert. This study was conducted online by Harris Poll, and the results were announced just a few days back by MDRT.
No Planner, Less Confidence
The study has also highlighted the key side effects of not hiring a financial planning expert. People who have never hired an expert demonstrated less confidence with complex financial terminology as compared to those who had hired an expert. For instance, people who have worked with a financial planning expert were confident with terms like annuities (49 percent) and long-term care insurance (41 percent).
Familiarity with Traditional Terms
More than half of the Americans (51 percent) who never hired a financial professional seemed confident with traditional terms like life insurance. But when it comes to complex terms like long-term care insurance and annuities the percentage drops to 31 percent and 28 percent respectively.
Jerad Sorgenfreir, CFA(R) of Bedrock Investment Advisors shared his opinion on the matter by saying that these results further stress the importance of planning for a healthy financial future. Mr. Sorgenfrei advises people to hire financial planning experts as early in their working lives as possible. “Even it that means starting off with a once-a-year visit to a professional who can offer some basic guidance on trying to maximize your TSP, IRA or 401(k) contributions. Starting early” as Mr. Sorgenfrei went on to say, “is incredibly important. But making sure you are on the right track by consistently monitoring your progress may prove to be even more critical.” Small incremental changes along the path to retirement can have an enormous impact on the results you see?
Many of the Americans who never hired a financial planning expert are not yet ready for retirement. Just less than half (about 46 percent) have a retirement benefits plan or an emergency fund. Only 19 percent have created a long-term financial plan for the future, and around 46 percent have a life insurance.
In contrast, of the 21 percent, Americans who have hired a professional for financial management are better prepared for retirement or an emergency. Approximately 77 percent have got a retirement benefits plan or an emergency fund, and half of them have crafted a long-term financial plan for securing their future. Around 63 percent have a life insurance as well.
Reasons for Not Hiring an Advisor
When asked why they haven’t hired a financial planning expert, 44 percent mentioned that they don’t have the assets or money to justify hiring one, 38 percent were confident that they could manage their finances on their own, while 36 percent said that hiring a professional would cost too much money.
On the whole, it can be said that there is a need for Americans to understand that they all need the assistance of a financial planning expert, and especially for Federal Employees who face the added complexity of understanding their federal annuities and Thrift Savings Plan.