One in Three Americans Think Financial Advisors Are Likely to Take Advantage of Them; New research from the 2017 Personal Capital Financial Trust Report. Visit here.
Lack of Trust Causing Consumers to Avoid Financial Advisors
SILICON VALLEY, Calif., May 24, 2017 /PRNewswire/ — With a steady stream of news about overcharges and conflicts of interests, Americans seem to be having doubts about whom they can trust with their finances.
Personal Capital, the leading digital wealth management firm, commissioned a survey, conducted online by Harris Poll in March 2017 among more than 2,000 U.S. adults, and today released its 2017 Financial Trust Report.
The research shows that many Americans are unaware that financial advisors are not always working in their best interests, and need to be better informed about how to work with advisors to protect, and grow, their retirement savings.
Among the report’s key findings are:
- Forty-six percent of Americans mistakenly believe all financial advisors are required by law to always act in their clients’ best interest (known as abiding by fiduciary standards). Thirty-one percent are unsure.
- Seventy percent of Americans said that recent events in the financial industry have made them question the trustworthiness of financial professionals, with men being less forgiving than women (74 percent vs. 67 percent).
- Roughly one-third of Americans (32 percent) believe that a financial advisor is likely to take advantage of a consumer.
Just over half (54 percent) of Americans do not work with a financial advisor. Of those individuals, 45 percent say they aren’t working with an advisor due to lack of trust.
- Twenty-one percent of American investors (those who have at least one investment account) know they pay investment fees but do not know the amount they pay.
“Too many traditional players in this industry are prioritizing their products, commissions and fees before the client’s best interests, and that is putting consumers’ hard-earned savings and retirement security at risk,” said Personal Capital CEO Jay Shah. “Typically, this is not the customer’s fault, as many advisory firms bury fees in fine print and jargon that is difficult to understand. We encourage all firms to meet a higher standard when it comes to offering objective, personalized financial advice in a more transparent manner, so that we can empower Americans to better manage their financial lives.”
The inaccurate belief that higher fees correlate with higher returns runs rampant. Thirty-two percent of Americans believe higher fees for investment accounts generally result in higher returns, despite studies that show otherwise. What’s more, 28 percent of American investors say they don’t pay attention to fees when selecting investment accounts – a number that jumps to 47 percent for investors ages 18-34.
“Americans count on financial advisors to help them manage their money and achieve their goals, whether that’s sending their kids to college or achieving a comfortable retirement,” said Personal Capital Founder and Chairman Bill Harris. “Achieving these critical life goals is a roll of the dice if the advisor is not a fiduciary. The financial wellbeing and best interest of the customer should be the top priority, and a legal obligation, for any firm managing consumers’ money.”
Personal Capital’s state-of-the-art personal finance software enables real time financial visibility and management for 1.4 million registered users. The firm manages more than $4.3 billion in assets on behalf of its clients and tracks $350 billion in assets for registered users.
To download the full report and for a deeper look into how Americans view financial advisors and their knowledge of fees, visit here.
This survey was conducted online within the United States by Harris Poll on behalf of Personal Capital from March 6-8, 2017 among 2,178 U.S. adults ages 18 and older, among whom 1,301 have at least one investment account. For complete survey methodology, including weighting variables, please contact Marianne Ahlmann at firstname.lastname@example.org.
About Personal Capital
Personal Capital is the smart way to track and manage your financial life. Personal Capital combines award-winning online financial tools that provide unprecedented transparency into your finances with personal attention from registered financial advisors. The result is a complete transformation in the way you understand, manage and grow your net worth.