Professional Advisers Ignoring Middle-Income Americans?

The survey also found that of middle-income Americans who do have a professional adviser, 84% made the initial contact.   

These findings from the “Middle-Income Retirement Preparedness Study” from the Bankers Life and Casualty Company Center for a Secure Retirement considered “professional advisers” to include a broad spectrum of people who can assist with retirement planning, including: financial planners, insurance agents, accountants, bank representatives, stock or mutual fund brokers, and lawyers.

Confidence levels among all middle-income Americans 

Participants in the study were pre-retirees or retirees between 55 and 75 years old.  Their confidence in adequacy of retirement savings varied substantially.  Thirty-seven percent said they are extremely or very confident with their retirement preparedness, 39% are somewhat confident, and 24% are not very confident or not confident at all.   

Feelings of confidence most commonly came from working with any kind of professional adviser (28%), having diversified retirement income sources (26%), carefully saving and planning throughout their working years (24%), living a simple lifestyle (18%), or not having any debt (11%). A lack of confidence was most commonly caused by a weak economy (24%), general uncertainty about future (17%), underperforming or no retirement accounts (12%), too little income (12%), or health concerns (9%).

Twenty-three percent of middle-income Americans surveyed by CSR said they never plan to retire and nearly half (47%) view retirement planning as complex and overwhelming.

The difference an adviser can make 

502 people participated in the study; 54% do not have a relationship with any kind of professional adviser, and 46% use the services of an adviser.   

Of the 54% who do not have an adviser, 84% said they don’t need one.  The top reasons for not needing an adviser were “I am capable of deciding for myself where and how to invest” (34%), “I do not have enough investable assets” (28%), and “It is too expensive/I can’t afford it” (23%).  Even though 34% of respondents without an adviser said they can take care of their investments themselves, 36% don’t spend any time doing research on retirement plan options.  Twenty-seven percent spend less than one hour a month, and 20% spend 1-3 hours a month.

The respondents who do not use an adviser use other sources of advice, however. Fifty-percent said they use the internet for advice, 38% use family or friends, and 35% use membership associations.

Of middle-income Americans age 55 to 75 who do not work with a professional adviser, 40% feel that a retirement planning professional would think their income is not large enough to need his or her products and services. Only 18% of those surveyed who do receive professional retirement planning advice share this concern.    

The 46% of middle-income Americans who use a professional adviser use all different kinds: 54% use a financial planner, 20% use a service representative at a financial firm, 6% use either a bank representative or stockbroker, and 4% use an accountant, mutual fund broker, or insurance agent/broker.

The average length of an adviser relationship is 11 years. Seventy-six percent of respondents are extremely or very satisfied with their adviser, 21% are somewhat satisfied, and 3% are not at all or not very satisfied.

The Internet-based survey was conducted in August 2010 by The Blackstone Group for the CSR.  Full details of the report can be seen here.