US Households Face Significant Financial Advice Gaps

Research and benchmarking firm Hearts & Wallets’ latest survey, the results of which were released Wednesday, revealed that American households have significant financial advice gaps, defined as finance-related tasks that U.S. households find very difficult and for which they have not sought help in the past 12 months.

Nationally, the largest gaps in advice, measured in dollar terms, include estate planning, emotionally handling market volatility, Roth conversions, buying and selling specific securities and balancing goals with required minimum distributions.

The findings point to the need for advice, both for in-workplace retirement plan participants and tasks related to out-of-plan financials. In separate research Hearts & Wallets  conducted for PLANADVISER recently, the firm found an increase in the use of workplace-provided advice across the board for savers—though with plenty of room for growth.

“Advisers and firms should regularly engage with clients to understand which financial tasks they are struggling with,” says Laura Varas, founder and CEO of Hearts & Wallets. “Usually clients struggle with multiple financial tasks, and knowing where to go to get help makes all the difference is addressing advice gaps.”

In its research released Wednesday, the firm found that a notable portion of households in the “wealth accumulation” stage of life need advice on balancing short- and long-term goals. For retirees with assets between $1 million and $10 million, the primary advice gap is developing a strategy to withdraw income from multiple accounts.

Accumulators

Americans in all stages of life indicated similar levels of difficulty across tasks relating to retirement, income and tax optimization. Those in the accumulation life stage, which includes emerging, early and mid-and-late career stages, indicated similar levels of difficulty in retirement planning (41%) and estimating required minimum withdrawals (37%).

Retirement Stage

Meanwhile those in or near retirement, which includes pre-retirees, fully employed seniors and retirees faced a different set of challenges, assigned similar levels of difficulty across the various tasks: determining income to safely withdraw from assets (21%), determining strategy/timing for taking Social Security payments (18%), developing strategy/timing for taking income from multiple accounts (20%) and calculating minimum required distributions (18%).

Hearts & Wallets’ survey, “Pain Points & Actions 2024: Today’s Top Advice Gaps & the Customer Loyalty Connection,” was fielded from September 11 through October 6, 2023, with 5,846 U.S. households.