Survey Underlines Lack of Investing and Financial Planning

Americans feel saving for retirement can be difficult and confusing, as well as challenging to begin, according to a recent survey report from GetRichSlowly.org. The analysis shows past experience plays a key role in how active people are in the investment and retirement planning process.

For example, people who have lived through three or more major recessions are the most likely (19%) to take a hands-on approach to their day-to-day portfolio management. This compares with 10% of those who have seen two major recessions taking an active hand in their own portfolio management, and just 6% and 3% of adults who have lived through one recession and zero recessions, respectively.

When more widely defining “hands-on investors” to include those who offer some guidance to their adviser about how they want to see their money invested, as well as those who actively monitor their investments or at least check them quarterly, 67% of those that have been through three recessions have a hands-on investment strategy. Conversely, those who have had little or no experience with economic downturns were less likely to be investing at all.

According to GetRichSlowly.org, which provides investing and financial analysis and reporting, fewer than one in 10 (8%) Americans create parameters for how their financial adviser should direct their assets based on their own individual knowledge or research. This compares with 16% who “let others invest for me.”

Among the more surprising results is that the category “index funds” was not one of the top two investment strategies cited by those that said they do invest, with only 12% saying they currently hold index funds. Only 15% of U.S. investors say they review investment allocations at least quarterly, according to the survey, and just 7% say they currently pay for active supervision of their investments.

GetRichSlowly.org contributor William Cowie concedes that many consumers may not fully understand their own holdings. He adds that the lack of financial finesse and a reasonable long-term plan can have serious consequences down the line. Cowie says the youngest groups of Americans polled have the most to gain by investing early, “even if it’s just in a certificate of deposit.”

“It’s easy to take a glass half-empty approach to the data,” he says. “However, it’s encouraging that almost 30% of those in their mid- to early 20s are taking responsibility for their future, even while they’re making the lowest wages of their career.”

Further analysis of the survey results, and other GetRichSlowly.org research, is presented on the firm’s blog.