This article, from our friends at Principal Financial Group, is “right on” with how a financial planner/advisor can help all of us plan a better NOW and FUTURE. As the Director of Financial Planning here at Servant Solutions, I agree that many in our plan are ignoring the oncoming, runaway “freight train” of issues that, if not addressed, will cause havoc to their financial future. Please contact us today about our FREE Financial Roadmap process that will get you on the road to a successful future in the areas of healthcare, college planning, budgeting, estate planning and retirement. We are proud of our motto, “Serving Those Who Serve”, and we want the opportunity to serve you!
Director of Financial Planning, Servant Solutions
One of the best financial choices you can make now. Your future self will thank you.
by Jerry Patterson, SVP Retirement & Investor Services, Principal Financial Group
Are you really planning for retirement like you should? Like really-really? It’s OK. We’re all friends here, so you can be honest. But I have to tell you, most Americans aren’t. Especially those who’ve reached the big 5-0 and are looking to retire in the near future. But have no fear! There is one little thing you can do that may help make a big impact. Let me explain …
We recently completed research focusing on how Americans age 50+ manage their money as they approach and enter retirement. The research uncovered some pretty big gaps relative to:
- Health expenses. A lack of knowledge about the potential out-of-pocket healthcare costs in retirement. Most are vastly underestimating the cost.
- Claiming Social Security benefits. Knowing the best time to claim Social Security benefits, especially for married couples. Many are taking it too soon.
- Retirement income. Understanding the importance of setting aside enough savings to provide income that’ll last for the rest of your life, rather than assuming that a “pile of money” in a retirement savings account will get the job done. Many are overestimating how far a given pile of money can be “stretched.”
Despite the discouraging findings, there is a silver lining. There is a way that all of these gaps, and more, may be addressed and it starts with a financial advisor. A good financial advisor can help you work through the tough questions and challenging decisions, especially during the (extremely critical) years leading up to retirement. Even though these financial advisors are out there, they’re not being tapped for their expertise and we have proof.
In this same research, we asked participants a few questions regarding their use of financial advisors. We found that 37% of participants in their 50s worked with a financial advisor. (Insert high-five emoji!)
Just as encouraging, 71% of this age group indicated that they planned to work with a financial advisor as they got closer to retirement. (Insert thumbs-up emoji!)
Unfortunately, the momentum stopped there. When we asked people in their 60s if they worked with a financial advisor, only 44% said they did. And of those in their 70s, only 34%. (Insert crying emoji.)
So what does that mean? It means that most people fully intend to work with an advisor, but most don’t. Ever. Many factors—inertia, shame, suspicion and fear—keep millions of Americans from seeking professional advice. So why the hesitation?
In many of my conversations with advisors, it’s nothing more than good old-fashioned inertia. That and the fact that most people aren’t seeking advice. This provides a great opportunity for advice to be given by a financial advisor. Especially as people’s attention spans continue to shrink and as the world continues to get busier and more digital. Even with those obstacles, they haven’t diminished the value of advisors. In fact, in an increasingly busy, complex, and fast moving world, the core value many advisors bring (like keeping clients calm and focused on the long-term plan) is even more valuable.
I talked to Matt Ramaekers, a financial advisor, about this very issue just a couple weeks ago. We discussed the value of professional, personal advice versus self-directed investing or advice being provided from emerging technologies, like robo-advisors. I asked Matt to describe the value he brought to the equation, as a living, breathing human advisor, versus a robo-advisor. Without missing a beat, he said the most important thing he does for his clients is protect them from their own emotions. He focuses on helping them remain confident, rational and focused on the long-term, through good times and bad.
That’s not to say he doesn’t provide knowledgeable investment strategies. And make sure his clients have enough insurance. AND help them develop strategies to combat the shock of increasing healthcare costs later in life. He does all that.
But at the end of the day, when a client has realistic goals and a well-thought-out plan, Matt’s core mission is to make sure they stick with their plan for the long haul and, when necessary, to nudge them to take action. His job is to be there when things get dicey and to make sure they don’t let their emotions get the best of them when they consider making a change inconsistent with their plan. He’s there to make sure his clients make informed decisions regarding the timing of Social Security payments, rather than changing direction based on something they saw on Facebook.
Our research continues to show that most Americans don’t want to become financial experts. But they want help and they want to have a plan. While an advisor can definitely help develop a plan, they can help you … wait for it … stick to that plan through thick and thin.
For many, the simple value of protecting you from yourself can be priceless. For most people, it’s something that cannot be replaced through technology, and a large percent of people still prefer not to do it themselves. While new, exciting tools are emerging for the self-directed investor, there is still an enormous need for the emotional support that professional financial advisors provide.
Research: Principal Financial Group, February 2016.
This post was previously published on The Huffington Post on 9/12/16.