In the wake of unprecedented high inflation, rising interest rates, and market volatility, 96% of investors who work with a financial advisor are satisfied with their financial advisor. That's a pretty clear overwhelming majority, according to a survey of 1,000 retail investors by Broadridge,
The same study found that although 33% of investors are familiar with robo-advisors, only 6% use a robo-advisor. Robo-advisors are frequently used by investors who want to make their own decisions with their investments, but don't want to handle the tasks of actually trading and rebalancing their portfolios. For more about robo-advisors, read the Escient Financial Insights article What is a Robo-Advisor? 6 of Your Top Questions Answered.
When it comes to millennials, 65% of millennial investors currently use self-directed investing and do not work with a financial advisor. They could be completely handling their own investments themselves, or they could be utilizing a robo-advisor. Additionally, 65% of those millennial investors not already working with a financial advisor said they are likely to begin working with a human financial advisor.
Why Would Investors Begin Working with a Human Financial Advisor?
With the high satisfaction of investors with their financial advisor, it's clear that investors see a high value in a human advisor when looking for a service to plan and manage their investments and tailor a financial plan and investment choices to their unique situation and needs. It's a recognition that investors know the importance of a real financial planner and having better control of when and how their money is invested.
What is driving that value and recognition?
Financial Goals
In the survey, 53% (over half) of investors who plan to turn to human financial advisors were concerned they won’t be able to achieve their financial goals. You may have a number of goals, such as funding a college education for your children, an annual vacation, a new car, and first home purchase or vacation home purchase, retiring at a certain age, and of course being able to financially support yourself during your retirement. Those are common goals, and you may have a number of additional goals that are personal to you. A robo-advisor won't know your goals and how to invest your money to specifically help you achieve those goals. If you're not using a robo-advisor and are instead investing all on your own, you may not know how to figure out how much money you need in the future for those goals and how much to invest now to achieve those goals by a certain date. That's where a real human financial advisor can help.
Financial Stress
Also in the survey, 46% of investors want to work with a financial advisor to reduce financial stress. That demonstrates that working with a financial advisor can help investors feel more confident about their financial goals and provide them with peace of mind. A human financial advisor can monitor your investments and how they are affecting your ability to achieve your goals, and recommend adjustments to your financial plan when necessary, so you don't have to.
Real Financial Planning
A human financial advisor can offer a larger array of services, including retirement planning, insurance planning, tax planning, education savings and planning, and more, in addition to investment advice and management. With a robo-advisor, the investments are in a standard model portfolio that is used for all of their investors. The allocation of those investments may based on a projected retirement date, life expectancy, and risk tolerance. However, there are many more factors that could and should be taken into account when deciding on the appropriate investments and allocation for an investment portfolio. That includes taking into consideration other investments inside accounts that the robo-advisor doesn't have access to, including 401(k) and other employer-sponsored retirement accounts or other accounts at different financial institutions.
Having a human financial advisor performing real comprehensive financial planning, like Escient Financial provides, is defined by a personalized experience where your specific and unique situation and goals are evaluated to develop a financial plan just for you, to make a difference in your life so you can live the life you want to live.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as investment, tax, or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Digital assets and cryptocurrencies are highly volatile and could present an increased risk to an investors portfolio. The future of digital assets and cryptocurrencies is uncertain and highly speculative and should be considered only by investors willing and able to take on the risk and potentially endure substantial loss. Nothing in this content is to be considered advice to purchase or invest in digital assets or cryptocurrencies.
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