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Retirement planning and savings are comparable to other forms of participation in financial in that there are no silver bullets or magic panaceas that will suddenly juice returns or expedite the process.
However, retirement planning is like any other investing-related pursuit in that having an experienced professional on the side of the investor can create significant advantages. If that sounds like an endorsement for working with an advisor, it is because data confirm that clients, regardless of age, that work with an advisor on the retirement front are likely to be ahead of their counterparts that are going it alone.
Plus, there are an array of retirement myths that need busting. Do-it-yourself (DIY) investors and prospects should remember there’s often a fine line between myths and mistakes, meaning even if all the client is engaging the advisor for is retirement planning, that relationship could be worth its weight in gold.
For advisors looking to convince prospects of the value in professional assistance regarding retirement planning, read on because the data are on your side.
Proof Is in the Pudding
Northwestern Mutual's 2024 Planning & Progress Study, which was released a couple of months ago, confirms the value in working with advisors on retirement planning.
“75% of those who work with an advisor say they will be financially prepared for retirement versus 45% of people without an advisor,” according to the study. “: 64% of Americans with an advisor say they feel financially secure; just 29% without an advisor agree.”
Alone, those statistics are compelling, but imagine being able to tell a prospect the following: of those polled by Northwestern Mutual, those working with advisors believe they’ll be able to retire at 64 while their counterparts that don’t have an advisor see retirement coming at 66. In theory, two years isn’t that long a time, but it could be an eternity for those that don’t like their jobs or those that see themselves as simply punching a clock to shore up retirement accounts. The study reveals other motivating factors when it comes to hiring an advisor.
“They also have saved twice as much money for retirement than those who do not have an advisor: $132,000 vs. just $62,000. Beyond the balance sheet, Americans with a financial advisor also feel more certain about their ability to reach their financial goals, and more bullish – believing that they reach their goals faster,” adds Northwestern Mutual.
Demographics Matter, Too
The impact of working with an advisor isn’t linear for everyone. For example, the benefits for someone in their 30s without substantial are likely different than those accrued by someone in their 60s with a net worth of $5 million. There are also demographic considerations, which is to say to some groups can derive significant benefit from working with advisors.
“Northwestern Mutual's study found that Black individuals with an advisor expect to retire three years sooner (age 61 vs. 64). They also have almost three times more in retirement savings on average than Black consumers who do not have a financial advisor ($71,000 vs. $26,000). They also expect to pay off their college debt five years earlier (by age 41 vs. 46),” according to the research.
Bottom line: advisors can make big differences not only when it comes to retirement readiness, but they can also make significant progress in closing wealth gaps and that’s a good thing.