A silly question – maybe? OK, Halloween is over, but I got a bit of a fright when I reviewed a recent survey done by Harris Poll stating: “Nearly three quarters (71 percent) of Americans say some aspect of talking to a financial advisor scares them . . . ” That’s a huge number. What’s going on here?
The way that people are expected to fund retirement has changed significantly over the last 20 years. Pensions have all but disappeared, leaving the 401k as the primary means of building retirement funds. This change represents a shift in the burden of financial risk from the company to the employee, who is now responsible for making contributions, choosing investments, and deciding how much to withdraw and when. With these challenges and responsibilities, people need help now more than ever, yet are reluctant, or even afraid, to ask for it!
The findings of the survey identified three main areas of concern.
Fear of what it will cost
Almost 50 percent of respondents cited fear that talking to an advisor would “cost a lot of money.” In addressing this fear, it’s important to consider what a financial plan entails, and how the benefits of a plan compare to the cost of creating it.
A comprehensive financial plan will include analysis of critical factors, such as how much you are able to save, how much you might be able to spend, how much you’ll need to retire, and when you might reach that goal. It will evaluate whether you are adequately insured against risks that could seriously set you back, potentially putting your retirement at risk. A plan can find ways to save on taxes, maximize social security payments, and fund long-term care.
Any one of these items can have a significant impact on your life – sometimes in dollar terms, but also in feeling more secure and confident about retirement. These benefits can easily exceed the average cost of a financial plan. Think of this – a single three-week vacation overseas can cost a whole lot more and have less of a lasting influence on your wellbeing!
Fear of divulging personal information
Nearly half the respondents were hesitant to trust a financial advisor with their personal information. I think this is more about emotional vulnerability, less a fear that the information would actually be compromised. Divulging the nuts and bolts of one’s financial situation can be embarrassing. Reluctance to experience these negative emotions tends to keep people away. However, if we can find the courage to own these feelings, the pay-off is great.
Fear of being “sold”
People fear that a financial advisor is out to “sell” them something, especially something they may not need. There is good reason to be skeptical. People should be wary of advisors and planners who sell commission-based products rather than services. These products are often applied like a band-aid, without consideration of the complete picture of the client’s needs, and are unlikely to solve the fundamental problems. A credentialed practitioner (such as a Certified Financial PlannerTM) will take a comprehensive view of your situation and recommend appropriate products and strategies.
When it comes to retirement planning, people do need help now more than ever. Feeling more secure and confident about the future is worth every dollar you spend on it. When compared to the benefits achieved over decades of retirement, the expense of creating a financial plan seems small. If you are afraid of talking to a financial advisor, you are not alone. I hope I have been able to dispel some of these fears. If you need someone to talk to, give me a call.