…But almost all who use one say they’re worth itExcerpts from a recent article from Magnify Money, a Lending Tree consumer financial site, written by Devon Felfino, measures how the public views the importance of using a financial advisor. Read the full story here.
According to a MagnifyMoney survey, 30 percent of responding Americans have a paid financial advisor — with 60 percent saying they sought one after a specific life event. Of those with an advisor, nearly all of them (95 percent) believe “they’re worth the money.” The most popular reasons for working with a professional are investment management (60 percent) and help with financial goals (38 percent).
However, there are widespread misperceptions about advice: Forty-two percent of consumers feel advisors are “only for wealthy people,” and 38 percent think they can find the same information online. Of those without a paid financial advisor, 45 percent believe they tend to cost a lot more than they really do.
Excerpts from the Article
Life changes, and often that means finances change, too. A financial advisor can be a valuable guide during these times, clarifying the financial aspects of buying a house, retiring and more. But 42% of Americans think financial advisors are only for the wealthy, even as 95% of those with one say they’re worth the money.
We surveyed more than 1,500 Americans on everything from why they have (or don’t have) a financial advisor to whether they’d consider getting a financial advisor in the future, to whether people think they could get the same information on Google. Here’s what they said.
- 30% of consumers have a paid financial advisor. Those most likely to pay for an advisor include consumers with incomes of $100,000 or more (55%), college graduates (41%) and men (35%).
- 60% of those with a financial advisor hired one after a specific life event. For example, more than 1 in 5 Gen Zers with a financial advisor hired one after a death in the family and/or receiving an inheritance, while 22% of millennials with a financial advisor got one because of a marriage or divorce.
- 95% of those with a financial advisor think it’s worth the money, with many (61%) saying they pay less than $3,000 annually for related financial services.
- Fair fees are most important to consumers looking for a financial advisor, followed by being local and showing proven returns. Additionally, more than 10% of consumers 40 and younger say diversity is important to them (about double the percentage of consumers older than 40 who say the same).
- Many misconceptions about financial advisors’ services exist. Forty-two percent think financial advisors are only for wealthy people, 38% think the same information can be found online and 25% think you don’t need a financial advisor until you’re middle-aged.
- 45% of those who don’t have a paid financial advisor — and 50% of all consumers — think they typically cost much more than they do. Fee-only advisors typically charge between 0.5% and 1.25% of the assets they manage, but these respondents believe the typical cost is between 5% and 15% (or more) of assets.
- At the end of the day, 82% would rather have a financial advisor manage their investments than a robo-advisor. That said, 29% of Gen Zers would prefer using a robo-advisor, more than any other generation.
Millennials, Gen Xers and baby boomers cited investment management as the main reason why, while Gen Zers cited tax planning. In fact, 46% of Gen Zers with a financial advisor get help with tax planning, versus:
- 34% of millennials
- 24% of Gen Xers
- 10% of baby boomers
For the most part, those with a financial advisor said they hired one after a specific life event (60%). Getting married or divorced (14%) or receiving an inheritance or other large sum of money (11%) were among the most common responses. Another 12% cited reaching retirement age, but that can be a costly wait in the long run.
Some interesting trends emerged around this, including:
- 22% of Gen Zers with a financial advisor hired one after a death in the family and/or receiving an inheritance
- 22% of millennials with a financial advisor got one after getting married or divorced, and 19% after the birth of a child
- 23% of baby boomers with a financial advisor hired one when they reached retirement age
Again, delaying getting a financial advisor can be a bad move in the long term, especially for those who wait until retirement to start thinking about it. But for those who are interested in getting started, it’s important to know that it may be less expensive than many assume. Of those with a financial advisor, more than 6 in 10 pay less than $3,000 annually for those services.
Read more here.