Financial Advice Doubles Retirement Savings
Retirement savers who use financial advice, education, or planning tools have account balances twice as large as those who do not, according to a T. Rowe Price report. The data suggests that professional guidance significantly impacts long-term savings outcomes.
- The T. Rowe Price analysis is based on recordkeeping data from over 2 million retirement plan participants. - Participants who engage with financial advice, education, or planning tools save at a rate 29% higher than those who do not. - Despite the positive impact on savings, only 13.8% of eligible participants currently use these professional guidance resources. - A separate 2024 survey by Pontera found that advised participants contribute an average of 15% of their income to their workplace plans, compared to 10% for their non-advised peers. - That same Pontera survey revealed 66% of participants working with a financial advisor contribute the maximum amount to their 401(k), versus 40% of those without an advisor. - The most common reasons people avoid seeking financial advice are concerns about the cost and a belief that they can manage their own finances effectively. - According to a Deloitte report, 66% of individuals who consult a professional have a formal retirement plan, in stark contrast to just 28% of those who do not. - A study published by the Financial Industry Regulatory Authority (FINRA) found that advised households have a significantly higher allocation to equities (47.9% vs. 36.1%) and are four times more likely to have a formal financial plan.
