Financial advisors help build confidence for retirement

Mature couple sitting on sofa with financial advisor

Image: Nosnibor137/Bigstock.com

The evidence is in. Those who seek help from a financial planner/advisor will feel more confident about their finances for retirement than those who don’t.

In MLC-Ipsos research a year or so ago, 35 per cent of those who used a financial advisor felt ‘very well / fairly well prepared’ for retirement. Only 9 per cent of those who didn’t seek advice from a financial professional had the same confidence.

This makes sense on several levels:

  1. Being pro-active by seeking out a professional to help with your retirement finances says you’re attempting to understand and take control of your situation.
  2. The complexities of the system and the rules governing finances in retirement can make it difficult for those of us without expertise to understand how we should set them up. That causes uncertainty. Uncertainty takes away confidence.
  3. Finally, the mere fact that the advisor helps you understand what needs to happen and what you need to do makes a big difference to levels of confidence

Of course, the question will always be asked about whether we should spend money on a financial advisor, or go it alone so that the money involved can be put toward our retirement funds. That comes down to individual choice, but you need to ask if it could risk more than you save.

Confession: I’m a fan of seeking financial advice from a professional. It’s what helped us know two things: that, without a major disaster, we would be OK financially in retirement; and we had help to set up our funds in the best way as we transitioned into retirement.

The MLC research also included a question about what respondents would do if gifted $50,000. Most said they would spend the money on such things as their mortgage—with participants saying they would put more than half of their windfall on this—as well as savings and going on a holiday.

However, the amounts they said they would put into super, for retirement, differed. The average for those who use a financial planner was $6,798. For those who used other kinds of financial professionals (accountants, for instance) the figure was $4,564. Then, for those who don’t use either of these, it was $2,795.

Perhaps one of the real values of financial advisors is that they help bring retirement savings to the forefront of our minds.

Bruce Manners, author of Retirement Ready? and Refusing to Retire.

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Category: Finances

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