The Department of the Treasury and the Internal Revenue Service released new guidance that is “designed to expand the use of income annuities in 401(k) plans.”
By Cyril Tuohy
More than one in four potential investors – 26 percent – do not have a financial plan, and of those who don’t have a plan - about 38 percent - say they have no intention of ever creating one, according to an investor sentiment survey conducted by Nationwide Financial.
The “Fear of Financial Planning” survey also found that investors eschew financial planning for any number of reasons: inertia, cost, inadequate assets, mistrust and a belief that the do-it-yourself (DIY) approach is adequate.
Michael Spangler, president of Nationwide Funds, the mutual fund division of Nationwide Financial, noted the irony in the survey’s latest findings. At a time when Americans are more responsible for their own financial security than ever before, not enough of them seem to be soliciting proper professional guidance.
“An effective plan is much more than opening a savings account or investing in your employer’s 401(k), it’s a map to ensure that you get to your financial destination,” Spangler said in a news release. The good news, though, is that people don’t need to “go it alone,” he said, even if this survey reveals that quite a few investors might prefer to do just that.
The online survey found that of the 783 potential investors over the age of 18 with at least $100,000 in investable assets, 36 percent said they had never worked with nor are currently working with an advisor.
Among investors not working with an advisor, 40 percent said they didn’t feel the need to rely on the expertise of a professional, 20 percent said professional help was too expensive, 11 percent said they didn’t think they had enough assets to make it worthwhile for an advisor to bother, and 6 percent said they were afraid to trust a stranger to handle their financial needs, the survey found.
Of those investors working with an advisor, 19 percent said they feel they need help with an investment decision, and 17 percent said they rely on an advisor’s knowledge and expertise, the survey also found.
Spangler said the findings also revealed “significant gaps” that advisors can bridge to educate investors about the importance of financial planning to meet future goals.
The survey was conducted online in the U.S. from March 26 to April 3 by Harris Interactive on behalf of Nationwide Financial.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at Cyril.Tuohy@innfeedback.com.
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