Financial advice has a strong influence on the savings and spending habits of a majority of young adults who seek it, according to a recent survey from TIAA-CREF.
The survey, conducted between Aug. 28 and Sept. 2 by KRC Research, polled a random sample of 1,000 American adults on their attitudes, preferences and behaviors about receiving financial advice.
Twenty-eight percent of the sample was between the ages of 18 and 34, the group known as Millennials or Gen Y.
Seventy-one percent of these young adults were likely to monitor savings more closely and 66 percent to change their spending habits after getting financial advice, a bigger proportion than older cohorts.
They did this despite the competing pressures of student loan debt and underemployment.
“Professional advice can help you create a budget and strategy to gain financial independence and build security,” Amy Podzius, a financial consultant at TIAA-CREF said in a statement. “It’s important to remember that an early start can significantly help you save more over the long term.”
Podzius pointed out, for example, that for every 10 years someone delays saving, he’ll need to save three times as much to catch up. Say that person contributes $1,000 per year into an IRA every year from age 20 to age 30, and contributes no more. At a 7 percent average annual return, his account will be worth $168,515 at age 65.
But if he waits until age 30 to start saving, he will need to contribute $1,000 per year for 35 years at the same average return to reach an account value of $147,914 at age 65. “If money is tight, setting aside even small amounts now will likely reap large rewards over time,” Podzius said.
When it comes to financial planning, 61 percent of Gen Y poll respondents were interested in interacting with an advisor online, 59 percent with attending webinars and 58 percent with live seminars, compared with surveyed Americans overall (45 percent, 47 percent and 46 percent, respectively).
In addition, 76 percent of Gen Y members wanted financial advice designed specifically for their needs, and 72 percent wanted relevant tools and calculators that break down complex advice principles.
The survey results demonstrated that Gen Y adapted to broad technology changes, but placed trust more narrowly, according to the researchers.
Seventy percent of Gen Y advice seekers relied on friends and family for financial advice, while 55 percent of advice seekers older than 34 relied more on financial service provider websites or online tools.