July 13, 2012

Consumers With Advisors Better Off: LIMRA

Education leads to higher savings rate, retirement plan participation

It probably comes as no surprise to advisors that consumers who work with a professional tend to be better off than those who go it on their own. A LIMRA survey released Wednesday confirmed consumers who work with advisors are more likely to be saving in a retirement plan and at a higher rate.

"We've all seen the scary statistics that not enough people are saving for retirement—a recent LIMRA survey revealed that almost half of Americans were not contributing to an employer-sponsored retirement plan or an IRA," Alison Salka, corporate vice president and director of LIMRA Retirement Research, said in a statement.

The survey found that, regardless of income level, more than 60% of consumers who work with an advisor are contributing to a retirement plan or IRA, compared with just 38% of those without an advisor.

Furthermore, 61% of consumers who work with an advisor contribute at least 7% of their salary to their plan. Just 36% of consumers without an advisor save at this rate.

The guidance and education that advisors provide their clients to bring on these good saving habits translate to higher confidence, too. Of non-retired consumers with an advisor, half said their advisor provided guidance on how much to save. More than 70% of Americans with an advisor say they’re confident they’re saving enough. Just 43% of consumers without an advisor felt the same.

"It is clear that advisors make a difference," Salka said. “It is vital that we as an industry better communicate the value of using an advisor to ensure a secure retirement—especially to younger consumers who are less likely to have a pension to rely on in retirement and, according to our survey, are also less likely to be saving for retirement."

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