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Retirement Planning > Saving for Retirement

Investors Want Help, but Fear Being ‘Ripped Off’ by Advisors: Survey

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Most Americans say they need more help when it comes to saving money and preparing for retirement, according to the latest poll conducted by Hearts & Wallets. But they appear to have a high degree of mistrust of financial advisors.

The survey of 5,000-plus households found that 62% of respondents wish they were doing a better job of saving. Plus, putting money away “is a largely unmet need” for more than 40 million households with $5.2 trillion in investable assets, who find it difficult or extremely difficult to know where to put savings, according to Hearts & Wallets research.

At the same time, investors are feeling better about the U.S. economy, inflation and retirement in general vs. last year. Yet, close to half, 44%, said they fear being “ripped off” by financial professionals, the poll finds.

“Consumers are focusing on the bird in the hand—their emergency fund—but are very aware of the bird in the bush and, with their improving mindset, know they need to do more to build their retirement funds and overall savings,” said Hearts & Wallets CEO Laura Varas, in a statement.

The news for advisors, isn’t all bad, she pointed out.

“In general, U.S. households are feeling better, but there is a nagging undercurrent for something more. Few households made money last year. Some are caught between the fear of losing capital and missing growth. It’s a great opportunity for financial providers who understand the mindset and challenges of specific target groups to design solutions that meet their needs,” Varas explained.

Overall, consumers said their household wealth is stagnant. Thus, with the exception of retirees, many of them are more willing to risk market volatility in pursuit of gains in the low-interest rate environment.

“In particular, receptivity of younger investors reached new highs not seen since 2010 with almost one-third being comfortable with volatility,” the data and consulting group stated.

Twenty-seven percent of investors said they are comfortable with volatility as a possible means of getting higher returns vs. 22% in 2015.

When investors with households in the accumulation phase were asked if their retirement savings are on track, less than one-third responded positively, representing a drop of seven percentage points from two years ago. This decline is found across “life stages,” with the greatest decrease among those nearing the traditional age of retirement, ages 53 to 64.

Close to one-third (31%) of those saving for retirement say they are “unsure” how to fund retirement, especially households with less than $100,000 in investable assets.

However, as they wrestle with finding retirement income, investors seem to be more open to using the resources offered by their employer-sponsored retirement savings plans. For instance, workers 40 to 52 are now as receptive as younger consumers with 45% agreeing they would “use retirement planning resources provided through my employer, or would if they were offered,” according to Hearts & Wallets. 

Mixed Emotions

Nationwide, anxiety levels and concern about the future fell in 2016, to 12% this year from 17% in 2012.

Older investors generally feel more upbeat than their younger counterparts: More than one-third of younger Americans (35%) say they have high to moderate anxiety, which is up from 27% in 2014.

But almost all Americans wish they were saving more, with the level of those strongly wishing that they were saving more jumping to 34% from 28% in 2010.

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