Why most people don’t work with an advisor, why it needs to change, and how we can do it.
These stats are scary, but also a major opportunity.
99% of Americans don’t use a financial advisor — CNBC.
75 percent of Americans are winging it when it comes to their financial future — CNBC
In 2020, only 29 percent of Americans worked with a financial advisor — Statista.
Money is arguably the most powerful tool in the world, yet no formal education exists around it. We learn more about long division and how to structure a term paper than we do our daily finances, investments, and insurance. It doesn’t make sense, and if it doesn’t make cents, it doesn’t make dollars, lol!
Why People Don’t Use a Financial Advisor
Although the studies vary a bit it is pretty clear that most people don’t use a financial advisor for the following reasons:
- They think it’s too expensive
- They carry too much debt
- They think they don’t need an advisor till they are middle-aged
- They think working with an Advisor is just about investment returns or retirement planning
- There is a lack of trust in the financial services industry
So essentially people don’t think they need an advisor till they are older, have paid off their debts, are ready to plan for “retirement”, think they can afford it, and feel like they trust them enough to work together.
You don’t have to agree with any of this, but the facts remain and are a clear representation of how the consumer feels. Their perception is all of our reality. And given this perception one can argue, do we really need financial advisors?
I think we do and here is why I think this perception needs to change.
Why it needs to change — more people should work with a financial advisor
If anyone is trained to help others with money it is financial advisors (everyone from coaches to life insurance agents). As financial professionals, we end up learning a ton through books, classes, certifications, and real-world applications. We aren’t experts when we start out, but the ones that stay in the game become experts. We know more than the majority of the population.
With this knowledge, we have a responsibility to educate, inform, guide, and empower people to take the steps necessary to master their money. Notice how I didn’t say sales?
If more people are given access to financial education and empowerment then doesn’t that improve society as a whole? I think so. The financial advisor is, in my opinion, a core piece of the engine needed to drive change and help more people.
This engine is not just the advisor though. Like a high-performance supercar, there are many parts that must fit perfectly together for maximum efficiency. We need the consumer, the advisor, the products & services, the marketing, and so on.
So why should more people work with an advisor? Simple, financial health supports mental & physical health and vice-versa. When we are better in these three areas we enjoy better lives, have a more positive impact on our communities, and get to teach the next generation how to do the same.
We also know from studies like this one from Morningstar is “that through prudent advice, advisors have the ability to add value” for their clients. Although this will vary from client to client it’s clear that advisors can and do add a ton of value.
What about DIY’ers?
Yes, even DIY’ers go to a medical doctor from time to time to make sure what they are doing is good and to get a second opinion. It helps keep them on track. So whether you are a DIY person or would prefer a personal trainer, having a financial expert on your team makes cents, so you can make some dollars, haha.
How we change it so the majority of people work with advisors
It’s going to take a village to shift the numbers, but here are some specific things that will help:
What Advisors Can Do:
- Lead with advice (education) — don’t make people feel like a sale is just around the corner
- Be transparent with your pricing — we don’t go to Best Buy to purchase a TV without first comparing prices
- Be accessible (virtually and/or in-person) — the consumer wants this convenience
- Don’t be pushy with your marketing/sales — check this poll out for more
- Use tech to enhance the human connection — robo distribution is OK, advice not so much
What matters most:
- Experience, credentials, fees?
- The advisor connects on a human level with the client?
- Transparency & trust?
ALL OF THE ABOVE!
I think we can agree these are all very important and necessary for more people to be willing to work with us, but there is a disconnect. What we know to be important is not how the consumer perceives us to be.
We must change the perception, one advisor and one consumer at a time. It will take a collective effort, and it will take time. But this is the opportunity.
What if there was a place to grant the access, transparency, trust, and advice consumers want while giving advisors the clients they want? Sounds great, doesn’t it?
Well, my team and I have created just that, we are still in stealth mode but if you are keen to learn more make sure to join our mailing list here.
This is our way to help change the status quo (the perception), to help more people live better lives.
So, do we need financial advisors? 100% YES! People want human advice, especially when the cost of being wrong is great, now we need to change the perception together.
How are you going to help change the perception?
Sending positive vibes your way,