Advice Shown To Be The Common Thread Between Age Groups And Investment Confidence

Another study has shown that those who have a financial advisor to help them with their retirement saving are more likely to be confident in their investing ability than those who do not have professional advice.

This study looked at the relationship between age and investing confidence. It showed that those in younger age groups are less certain than their elders of their investment knowledge, but that those younger investors also were less likely than their elders to have a financial advisor.

As many as 20 percent of millennials between the ages of 18 and 34 said they were uncertain about how best to invest 401(k) or other retirement money, compared with only 1 percent of those age 65 or older. That's according to the MassMutual Retirement Savers Survey.

Only 8 percent of millennials said they had a financial advisor for 401(k) or other retirement allocations, compared with 62 percent of people 65 or older.

Across all age groups, 32 percent of respondents said they relied on an advisor to guide them with retirement investment allocations.
The less that millennial employees rely on advice, the more likely they are to react to short-term market movements and follow through on dubious choices, said Ken Verzella, vice president of Workplace Solutions at MassMutual Retirement Solutions.

“Millennials are much more apt to make harmful decisions,” he said.

Age and Investment Confidence Related

When asked whether they were making any changes to their 401(k) or other retirement investments due to recent stock market movements, 21 percent of 18- to 34-year-olds were “uncertain about what to do,” compared with only 5 percent of respondents 65 years old or older.

Across all age groups, only 13 percent said they were uncertain about what to do, the survey found.

“Getting professional advice helps reduce uncertainty about money matters, especially in volatile markets,” Tom Foster, national spokesperson for MassMutual, said in a news release.

The survey, conducted by market researchers Penn Schoen Berland, was commissioned by MassMutual after the election of Donald Trump.

In the hours after Trump was declared the winner, the market dived only to recover shortly thereafter. Market indexes earlier this year closed at record highs.

The survey of 1,002 respondents was fielded April 3-10, and queried a sample reflective of the U.S. population.

Data about retirement investing habits were extrapolated from 450 respondents who reported they have a 401(k) plan and other retirement investments.

Asset Values, Perceived Value of Advice Connected

Millennials, who are at the beginning of their careers, typically have fewer assets than employees at the end of their working lives. So it isn't all that surprising that younger investors are less likely to rely on advice than are those in the rest of the working population.

Younger investors haven’t lived through as many market cycles. These investors often don’t see the value of advice through the same lens as a 65-year-old retirement investor with perspective, hindsight and higher asset values.

Of the 8 percent of millennials who report using a financial advisor, 19 percent said they relied on automatic investment strategies and 17 percent said they relied on employer guidance to help them with allocations, the survey found.

Across all age groups, only 13 percent of respondents said they use automatic allocation strategies and 10 percent rely on their employer’s education program as a guide to investing and resource allocation.

Advice Connected to Loyalty, Retention

Millennial retirement investors value employer investment tools and automated algorithms, but prefer looking elsewhere – to another person, for example – to validate those online tools, Verzella said.

He said younger investors tend to rely on a combination of advisory channels and are looking for employers to help them.

The more employers offer workers retirement investment guidance and advice, the less stressed young workers are likely to be and the higher the chances of employers retaining their workers' loyalty, he said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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