The majority of people who receive financial advice do not act on it, according to a survey that was recently commissioned by major financial services firm TIAA-CREF and conducted by an independent research firm.
Only one-third of the participants in the survey indicated that after being advised on what to do with their finances, they actually take action. However, almost one-half of these respondents specified that they are worried about their financial futures.
Personal Advice Crucial
These findings were not surprising to James Nichols, senior managing director of advice and planning services at TIAA-CREF, who stated that these Americans are facing a constant supply of information on what they should do to reduce their expenses, streamline their budgets, save more and invest effectively for their retirements.
He added that the best way to go about doing so is different for every individual, and that personalized advice can be very helpful. Individuals who are provided with recommendations that are specifically tailored to their financial situations are more than 60 percent more likely to utilize the advice than people who receive generalized guidance, according to analysis conducted by TIAA-CREF using data on its clients.
The research conducted by the major financial services provider revealed that people who received financial advice from the company may have as much as $200,000 more saved for their retirement as the result of a 30-year career.
"We've seen personalized objective advice help drive positive outcomes for our participants. Last year, two-thirds of those participants who took advantage of TIAA-CREF's advice took action – choosing to save more, review their retirement plan portfolio allocation or rebalance their portfolio – and nearly half have increased their contributions to their retirement funds," Nichols said in a statement.
Challenges in Finding Advice
One-fifth of the survey participants specified that they are encountering challenges in finding the financial advice they need, with 51 percent specifying that they don’t know where to seek this information and 74 percent are not sure which sources of financial advice are reliable.
The need that individuals have expressed for personalized financial advice is supported by the general trends displayed by asset markets both during and after the recession, as the various asset classes have moved together in tandem to a higher degree than before. This phenomenon makes it evident that people can benefit from designing an investment portfolio that is specifically tailored to their objectives, risk tolerance and investment horizon.