50-somethings go it alone in financial planning


Here is an astounding retirement planning trend, and it’s not a positive one. A new poll found that, 70 percent of young baby boomers between the ages of 50 and 59, don’t use a financial advisor.

Seventy percent! That’s despite the fact that this age group is widely considered to be in their prime retirement savings years. And it’s despite the rash of studies from industry, government and other sources affirming that Americans need, and benefit hugely from, professional advisors.

The survey was conducted in January and February by Harris Poll on behalf of Northwestern Mutual. It sampled views of nearly 2,100 Americans aged 18 and older, a big enough group to grant the findings some serious credence.

You gotta wonder: If 70 percent of younger boomers aren’t using a financial advisor, what are they doing? Forty percent said they take an “informal” approach to financial planning, and 12 percent said they wouldn’t call themselves planners at all.

A quarter of younger boomers indicated that their biggest barrier to doing financial planning is, amazingly, lack of interest (25 percent). But 13 percent cited lack of money, a more understandable reason given the economy of the past six years.

Before getting all uncorked about this, it helps to note that the researchers did find some positives. For instance, a sound majority (67 percent) of those aged 25 and older said they have a savings account. Well, that shows they are not spending down to the nub.

But there are troubling signs all the same — namely, that only a small proportion of Americans said they are using other financial products beyond savings accounts. For instance, although 39 percent have an individual retirement account, only 27 percent own stocks, only 23 percent own mutual funds and only 14 percent own bonds. What about real estate? Just 14 percent own that.

What about insurance products, a subject of great interest to InsuranceNewsNet readers?

Only 24 percent of the adults said they own term life insurance; just 23 percent own permanent life insurance and a de minimis 14 percent own an annuity. The ownership levels are even lower for long-term care insurance (9 percent) and disability insurance (8 percent). Just a few (6 percent) have a college savings account.

The survey did find that close to half of all adults (47 percent) feel “financially secure,” a slight uptick from the 43 percent who felt this way last year. So three cheers for that. And, among the 18 percent of adults who consider themselves to be “highly disciplined planners,” a whopping 70 percent reported feeling very financially secure. Three cheers for that too.

But of the 36 percent who consider themselves to be “disciplined planners,” only half (51 percent) described themselves as feeling “very secure” financially.

In addition, just 46 percent of informal planners and non-planners said the same. This last response is not especially surprising. Without use of an advisor, and the planning that goes with use of advisors, these individuals would have a hard time knowing whether their finances are very secure or not.

An old saying comes to mind, that “you’ve got to take the good with the bad.” That’s probably very wise. Yet, the findings in this survey about younger boomers not using advisors, and about limited use of financial products other than saving accounts cry out for some kind of response, or some kind of action, from the insurance and financial services industry.

Many retail advisors are of course trying to figure ways to reach the younger boomers. In addition, many employers do offer retirement savings plans at work, sometimes with auto enrollment, auto rebalancing, target date funds, online advice, and/or access to face-to-face meetings with plan advisors. Even the government is making an effort through its myRA savings program launched earlier this year.

But the Northwestern Mutual survey is an indication that more needs to be done if the nation is to avoid having a groundswell of impoverished or financially-stretched retirees on its hands. The question is, what?


Linda Koco, MBA, is a contributing editor to InsuranceNewsNet, specializing in life insurance, annuities and income planning. Connect with Linda →

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