The value of advice

Mar 26, 2018

Access to advice helps to combat financial stress.

John Hancock’s 2017 Financial Stress Survey1 uncovered critical financial matters that cause people stress.

  • Retirement savings and emergency savings top the list for most stressful financial worries.

  • Poor spending habits and credit card debt are the most common reasons people say they are not saving more for retirement.

One of the ways we can overcome stress is by taking action – every step we take toward a goal can alleviate stress. But when it comes to financial matters, many people don’t feel they know enough to take appropriate action – which in turn can cause more stress. When people need help making a financial decision, the most common place people start is doing online research. But some topics are complex enough to require more than just research – sometimes, what we need is good advice.

Our research found that people who work with a financial advisor have less financial stress, are better prepared for retirement, and are better equipped to manage financial stresses along the journey to retirement.

People who have a financial advisor are:

  • more confident about their financial situation

  • more likely to be on track with their retirement savings

  • knowledgeable about retirement savings strategies, personal savings strategies, and budgeting.

Knowledge and the advice of a trusted source give people the confidence to take action. People who work with a financial advisor:

  • are almost three times as likely to have contributed to an IRA

  • are better able to cover a financial emergency with cash

  • twice as likely to max out their 401(k) contribution

  • less likely to have taken a 401(k) loan

People are looking for personalized advice, which historically has only come from meeting with someone face to face. Self-serve advice options are becoming more sophisticated, enabling personalization online. Although online advice is growing in popularity, face-to-face advice is still appreciated broadly:

  • Millennials and Generation X have a slight preference for online advice over in person.

  • Low- to middle-income earners rate online and in-person about the same.

  • Baby Boomers and high-income earners have a strong preference for in-person advice.

The financial topics that people want help with vary according to where people are in their financial journey. Although the majority of people are looking for help with retirement planning and investing as their top two topics, beyond that, the topics vary:

  • Millennials, single people, and those earning less than $50,000 per year would like advice on budgeting and buying a home.

  • Generation X and married couples/domestic partners are looking for help with budgeting and long-term care insurance.

  • Baby Boomers and people earning more than $100,000 per year would like assistance when purchasing long-term care insurance and medical insurance.

  • Divorced and widowed people, as well as people earning $50,000 to $99,000 per year say they need help with budgeting and medical insurance.

There’s a world of advice out there – both online and in-person. What works for some people and some topics, may not work for others. While someone just starting a career may find an online budgeting worksheet helpful, a pre-retiree may need to talk to someone to figure out insurance needs for retirement. We’re all on our own journey, and every once in a while, we need some advice along the way.

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1 In June 2017, John Hancock Retirement Plan Services sponsored our fourth annual Financial Stress Survey. Working with the respected research firm Greenwald and Associates, we surveyed more than 2,000 workers to learn more about individual stress levels, their causes and impacts, and strategies for relief. All data in this article is from John Hancock’s 2017 Financial Stress Survey.

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These articles are not an edorsement of any particular product, service or orginization; nor are they intended to provide financial, tax or legal advice. They are intended to promote awareness and are for educational purposes only.