Experts suggest demographic trends behind preference for other sources of advice
Financial advisors have been struggling to prove their value to clients and prospects as a trend of fee compression continues across the financial-services industry. But as a new poll suggests, the decision to go without an advisor goes beyond cost considerations.
In a newly released national poll of almost 2,800 adults conducted by SurveyMonkey, CNBC and U.S. online-investing firm Acorns found that only 1% use a financial advisor.
Aside from 2% who didn’t give an answer, the remaining respondents said they rely on different people to manage their money or provide advice, including:
- Themselves (cited by 76%);
- Their spouse or partner (15%);
- Their parents (4%); and
- Someone else (1%)
Weighing in on the reasons why people shy away from getting professional financial help, certified financial planner Winnie Sun, president and founder of California-based Sun Group Wealth Partners said that the wealth of information available to this generation has made more people feel like they can make their own decisions without getting advice.
Another hurdle comes from the higher levels of debt among younger Americans, particularly from student loans, which leaves them with little money to invest.
Adding to the behaviour is a perception by many people that using a financial advisor is expensive and only for the wealthy, said certified financial planner Douglas Boneparth. He also suggested that people may not appreciate the different functions an advisor can fulfill.
“They think it’s specifically about managing money and not about receiving financial advice and financial planning,” the founder and CEO of New York-based Bone Fide Wealth told CNBC.
Of course, that’s largely a misperception. Aside from the growing cohort of advisors willing to work with a less-wealthy population, Boneparth noted that there are planners who offer complimentary consultations as well as advice paid for on an hourly basis.
The decision to work with an advisor doesn’t come spontaneously, however. And for Boneparth, “becoming financially-planning ready” isn’t necessarily tied to a certain amount of wealth accumulation or a specific age.
“It has to do with where they are in terms of responsibilities in their life,” he said, arguing that the shift comes at a point when a person’s duties and obligations leave them with little free time to deal with handling their money and investments.
Meanwhile, Sun emphasized the importance of approaching a professional for those who feel like they want to make a difference in their life but aren’t sure where to go. Those who do research online but can’t feel the information resonating with them or making any sense, she added, should also consider getting professional assistance.
“Finding a financial advisor isn’t something you can be pushed to do,” she said. “You’ll know when the time is right.”
