Study Identifies Retirement Planning Advice Gaps Advisers and Financial Firms Can Address

Even when financial tasks are difficult, individuals often do not seek professional help, suggests a report from Hearts & Wallets.

The report, “Pain Points & Actions: Insights to Address Large Advice Gaps by Reaching Consumers with Unmet Needs,” is an insight module drawn from the latest survey of the more than 46,000 U.S. households in the Hearts & Wallets Investor Quantitative Database. Individuals in the study say a range of financial tasks are more relevant to them than six years ago. For retirees and pre-retirees (those within five years of retirement) 14 of 16 financial tasks have relevance to three-fourths of these groups. Two of the largest increases are “knowing how to find resources to plan financially in retirement” and “developing a strategy to withdraw from multiple accounts,” both up 9 percentage points since 2012.

Accumulators (individuals still focused on working and saving) say 11 of 14 financial tasks are relevant to 90% this group, with the largest increases seen in “choosing investments” and “handling market volatility emotionally,” both up 11 percentage points since 2012. However, “choosing appropriate investments” is a top pain point for all individuals, including more than half (57%) of accumulators, 43% of pre-retirees, and nearly one-quarter (24%) of retirees.

For younger individuals, ages 28 to 39, the No. 1 advice gap for this group is “identifying what year I might stop working full-time.”

“Financial tasks like retirement planning are hard,” Laura Varas, CEO and founder of Hearts & Wallets says. “Consumers get confused or default to inertia because they don’t understand which solution out of the wide range of offerings in the marketplace fits their specific needs. Firms need to personalize products and advice so that consumers easily see what options are available to help them and don’t default to inertia.”

The findings can also inform plan sponsors and participants regarding the education retirement plan participants need.

Individuals not seeking help

Of the 59% of accumulators who have difficulty with retirement planning, including how much to save for retirement, only 16% have sought help. And among 39% of pre-retirees who have difficulty with developing a strategy to withdraw income from multiple accounts during retirement, only 11% have sought help.

For younger individuals, ages 28 to 39, only 3 out of 14 financial tasks have rates of seeking help above 20%.

Information about how to purchase the report is available here.