Middle Class in Need of Financial Advice

Middle-class Americans have never had more responsibility over their personal finances than they do today, creating a growing need for access to personal financial advice, Esther Stearns, CEO of NestWise—a subsidiary of LPL Holdings Inc.—told PLANADVISER. “Our industry has to a great extent underserved this demographic,” she said.

Forty-seven percent of all middle-class households are concerned about their retirement savings, according to NestWise, which launched in 2012 and serves the financial needs of the middle class through independent, fee-based advisers. For many Americans, 401(k)s are the primary form of investable assets, but 57% are uncomfortable making investment decisions about their company’s retirement plan.

In addition, 58% of middle-class Americans report rebalancing either sporadically or never. If investors do not rebalance regularly, their risk exposure may not be aligned with what’s appropriate for their financial circumstance and risk tolerance, Stearns said.

Recently released survey results from the Bankers Life and Casualty Co. Center for a Secure Retirement (CSR) found that when it comes to developing a retirement savings goal, only one-fifth (21%) of middle-income retirees and pre-retirees calculated a monthly retirement income goal number; and only one in 10 (13%) determined a total savings goal number to reach. (See “Few Income Goals, But Lots of Worry.”)

Despite the fact that the majority of Americans think they could benefit from professional financial advice to get them on track, NestWise found that 35% of middle-class households do not work with a financial professional because they do not think they have enough money to invest. In addition, 31% of middle-class Americans do not work with a financial professional because they do not think they can afford one.