TIAA, MIT Age Lab ask if investors are happy with financial advice

“The Future of Advice,” a new TIAA Institute study in collaboration with MIT AgeLab, reveals that only 40% of respondents said they are satisfied with the financial advice they receive. The study also highlights striking differences in how women and members of younger generations experience financial advice.

Despite retirement planning being the top priority for financial advice, there’s a significant satisfaction gap in the financial advice that people receive, indicating a clear opportunity for industry improvement, the study said. In fact, only 40% of respondents said they are satisfied with the financial advice they receive.

However, of those who worked with a financial advisor, 62% reported higher levels of satisfaction. This underscores the value and need for greater access to financial professionals, the study said. In implementing financial advice, the research shows that financial advisors use technology like AI to enhance, and not replace, the trusted advisor relationship.

'A fundamental shift'

“At this pivotal moment in financial services, we’re witnessing more than just a change in how advice is delivered—we’re seeing a fundamental shift in what it means to secure financial futures," said David Nason, CEO of TIAA Wealth Management and Advice Solutions. "As life expectancies extend and complexity increases, our industry’s true measure of success will be our ability to help millions of Americans transform financial guidance into lifetime financial security.”

"The ‘Future of Advice’ study is a unique opportunity to reshape how Americans across the generations receive and act on financial guidance," said Joseph Coughlin, founder and director of the MIT AgeLab. "Our research shows that successful advisory relationships must combine both high touch and high tech to provide the expertise, efficiency, and empathy clients value.”

Key elements of the study

The following are additional highlights of the study:

Gender dynamics matter. Women and men approach financial advice differently—from when they seek it during their careers to how they value advisor characteristics and communication preferences, with women prioritizing advisor expertise and ethics.
Traditional meets digital. While traditional communication methods dominate advice delivery, digital channels are gaining traction among specific demographics, suggesting the need for a hybrid approach to client engagement.

In collaboration with TIAA, the AgeLab wanted to understand the trends that might go into determining what the future of advice might look like, said Adam Felts, a research associate at the MIT AgeLab....The statistic that less than 40 percent of people are satisfied with the advice they receive about finances suggests an opportunity to provide wider access to advisory services than exists today, he said.

Scaling up advice through technology

One way to scale up access to advice may be through technology, Felts added. Younger respondents were more open to advice mediated through new technologies than older generations. “Social media, for example, could be harnessed as a way for advisors to connect with more people – but with the caveat that today, it is also an influential source of misinformation,” Felts said. “AI, particular tools powered by large language models, may also have potential for providing greater access to better advice.”

And when asked if investing for retirement is an important topic for MIT AgeLab, Felts said that the AgeLab is primarily interested in how people plan for later life. “For our team,” he said, “investing for retirement is just one component of preparing for longevity. We look more broadly at the full range of challenges that people need to plan for: where to live, who will provide care for them, how to get from point A to point B, and how people will use the surfeit of extra time they receive in retirement. And all of these complex topics are also connected with the topic of advice – because people need good advice to make sound decisions about all of them.”

Raising the number of satisfied clients

So, what do financial advisors need to do to increase the number of satisfied clients? Respondents who used a financial advisor had higher rates of satisfaction than those who didn’t, Felts pointed out. So, these results aren’t saying that advisors are responsible for the low rates of satisfaction. People who have an advisor are often happy with the advice they get. “Rather,” he said, “these results suggest a need to provide better access to good advice for more people. Most people don’t use an advisor and instead are reliant upon more informal sources of information and advice.”

The Massachusetts Institute of Technology AgeLab is a multidisciplinary research program that collaborates with business, government, and NGOs to improve the quality of life of older people and those who care for them. The AgeLab applies human-centered systems thinking to understand the challenges and opportunities of longevity and emerging generational lifestyles to catalyze innovation across transportation, longevity planning, caregiving, home and community, and the workplace.

The TIAA Institute is a think tank within TIAA, conducting cutting-edge research in the areas of financial literacy and longevity literacy, lifetime income, retirement plan design and behavioral finance in the context of retirement. The study was conducted with more than 1,000 participants in the U.S., providing a clear look into consumer preferences. Interviews with professionals were also conducted for a comprehensive view of the landscape of advice.

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