By Cyril Tuohy
For millennials, financial planning is easier in theory than it is in practice. That news may be hard to swallow for many young investors. But it’s also a signal that there’s a ready market for the financial advisors who can help them.
In a new survey, 64 percent of millennials ages 18 to 35 said they had a financial plan, but 68 percent of them also said they were not investing enough to pay for the retirement they envisioned for themselves.
The survey conducted on behalf of the Nationwide Retirement Institute found that 36 percent of millennial investors guessed at how much they needed to fund their retirement, instead of nailing down precise numbers.
Such findings raise this question: When are these young investors going to turn to advisors for help?
“To help close the gap, we recommend that millennials work closely with a professional advisor,” Mike Spangler, president of Nationwide’s mutual funds business, said in a news release.
Although 58 percent of the millennials surveyed said they conducted their own financial research and made their own financial decisions, only 50 percent said they were confident they knew how much to save for retirement.
For millennials without a financial plan, 28 percent believed that creating one was an overwhelming task, and 40 percent said they had not gotten around to creating a plan.
Millennials may be the poster children for the gap between talk and action, but it is also important to keep in mind that young investors don’t know how much they will need far into the future, so perhaps they deserve a little slack.
The encouraging news for advisors is that 56 percent of the millennials surveyed said they would be more financially successful with professional advice — even if only 39 percent of them actually used a financial advisor.
Of the millennials who weren't using an advisor, 18 percent said they did not intend to use one.
“The financial industry has a real opportunity to help millennials understand how to balance the demand of paying for today with investing for their future,” Spangler said.
Millennials said they would need about $110,000 annually to live comfortably in retirement. They listed the top three financial planning resources - in order of importance - as family, retirement planning websites and financial advisors.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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