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Cerulli: Investors under age 40 lack financial advice

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Fewer than one in five investors under age 40 believe they received adequate financial advice following a recent life event, according to a new report.

Cerulli Associates, Boston, published this finding in the second quarter 2013 report of the “The Cerulli Edge: Retirement Edition.” The report examines the characteristics of investors under age 40.

The percentage of households agreeing they are getting enough financial advice following the start of a new job tops out 19 percent in the report, less than one five of those surveyed by Cerulli. The fewest households—just one percent—said they received adequate advice following a divorce.

The percentage of households indicating they received enough advice for other life events was in the single-digits to low double-digits. Among them:

12 percent—moved primary residence

11 percent—New child born into the home

9 percent—Left a job (but not to retire)

8 percent—got married

7 percent—lost a job

6 percent—bought a new home

4 percent—refinanced my mortgage

4 percent—Changed careers

1 percent—received an inheritance

“Financial providers need to better recognize and identify when these young investors hit various life stages and provide more advice and guidance,” Cerulli Analyst Roger Stamper says in a press statement. “The multitude of life events taking place during these years is likely to dictate younger investors’ interactions with financial providers as they progress through various life stages.”

The report urges asset managers and record-keepers to “use the advice gap as a market opportunity” by engaging with clients under age 40 prior to big life events.

According to record-keepers, Cerulli states, simplification and automation are the best plan design changes that plan sponsors can make to encourage savings among investors under 40. More than 9 in 10 (92 percent) urge simplification of the enrollment process. Other plan design change they point to include:

Implement auto-escalation (85 percent of record-keepers)

Simplify investment men (77 percent)

Adjust match to higher percentage (69 percent)

Provide complete financial education (54 percent)

Other (31 percent)


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