TIAA-CREF Survey Reveals Lack of Personalized Financial Advice Leaves Americans at Risk

NEW YORK--(BUSINESS WIRE)--TIAA-CREF, a leading financial services provider, today released findings from a study revealing that only one-third of Americans consistently take action after receiving financial advice.Despite the lack of action among so many, nearly half of all surveyed admitted they worry about their long-term financial futures.

“Meeting the Demands of An Aging Population”

The survey was conducted by an independent research firm and polled a random sample of more than 1,000 adults nationwide on their attitudes, preferences and behaviors about receiving financial advice.

“The fact that people are not consistently acting on the advice they receive comes as no great surprise. People are all too often inundated with information telling them to save more, cut costs and plan for retirement, but how you go about that differs for every person,” said James Nichols, senior managing director, advice and planning services at TIAA-CREF. “At TIAA-CREF, we recognize that when it comes to personal finance, one size does not fit all.”

According to recent analysis of TIAA-CREF’s own client base, individuals are more than 60 percent more likely to implement a financial change when there is an explicit investment recommendation vs. general guidance.¹In addition, participants who received TIAA-CREF’s advice, on average, may have $200,000 more in savings at retirement over the course of a 30-year career.²

“We’ve seen personalized objective advice help drive positive outcomes for our participants.³ Last year, two-thirds of those participants who took advantage of TIAA-CREF’s advice took action – choosing to save more, review their retirement plan portfolio allocation or rebalance their portfolio⁴– and nearly half have increased their contributions to their retirement funds⁵,” Nichols added.

The survey also found that the desire to seek advice and take action differed based on age, gender and other individualized factors.

Respondents ages 18 to 34 – “Gen Y” – showed more interest in getting financial advice than any other age group surveyed. And four in 10 said they frequently look for financial advice.Gen Y also was more likely to report making changes after receiving advice, and nearly 60 percent said they are likely to use online tools to do so.
Women respondents were more likely than men to face challenges finding financial advice. Nearly half of women surveyed believed personalized, objective advice will cost more than they can afford, and more than one-third said they don’t have the time to look for it.However, women were more likely than men to take action on advice received, with nearly 90 percent reporting they do at least some of the time.
According to the results, baby boomers (ages 55-64) were the most likely to report financial advice was very difficult to find. Furthermore, only one in three boomers admitted they consistently act on the advice they do receive. This is especially concerning given the size of the baby boomer population. Over the next 30 years, the number of adults older than 65 is expected to reach 80 million.⁶

“Clearly there are gaps in the marketplace between what people say they need and what’s readily available to them, and we are continuing to evolve our advice offering to address those needs,” Nichols said. “We recognize that it’s important to work with individuals in a way that is comfortable for them – from both a convenience and trust perspective.”

The survey findings further support the need for individualized advice, with one in five Americans saying finding relevant financial advice is difficult.Of those, 51 percent said they don’t know where to start looking, and 74 percent said they don’t know which sources they can trust for financial advice.

TIAA-CREF understands individuals’ diverse needs and continues to expand its portfolio of participant advice and education resources to give clients more options for receiving help, including:

A new online center for planning and advice, which gives clients information about their investment options and easy access to financial education tailored to their individual needs. Clients also will receive individually targeted messages that detail the steps they can take to help improve their retirement outcomes.
The addition of new online retirement planning services to the firm’s existing library of tools and calculators:
- Retirement Advisor helps individuals increase their retirement contributions, change investment options and reallocate their portfolios automatically.
- Retirement Income Planner generates customized strategies and illustrations to help individuals make specific decisions about converting savings into retirement income. This service is most powerful when used in combination with an in-person consultation.
Expansion of in-person advice services, with plans to continue additional hiring of individual advisors across the country. This will result in a significant increase of licensed and trained advisors over the next five years.
The enhancement of TIAA-CREF’s comprehensive financial education program – Financial Essentials - which encompasses on-site workplace seminars, webinars and educational content designed to help individuals achieve better financial outcomes.

TIAA-CREF has been offering personalized retirement plan advice since 2005 at no additional cost to clients. The company offers in-person financial services at more than 65 offices across the country, in addition to phone representatives who are licensed and trained to provide advice. These services provide individuals with a suggested asset class mix and investment recommendations, designed to improve their chances of successfully reaching their retirement income goals.

For more information read the TIAA-CREF Financial Advice Survey Executive Summary.

Survey Methodology

The survey was conducted by KRC Research by phone among a national random sample of 1,006 adults age 18 years and older nationwide between July 11, 2012 and July 17, 2012. The margin of error for the entire sample is plus or minus 3.1 percentage points.

About TIAA-CREF

TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $495 billion in assets under management (as of 9/30/12) and is the leading provider of retirement services in the academic, research, medical and cultural fields.

TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.

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References:

	1.	Based on TIAA-CREF 2011 Advice and Guidance Sessions. In 2011, 49 percent of employees with actionable fund-level advice did a full or partial implementation compared to 30 percent of employees with asset class guidance made some reallocation change.
	2.	Based on TIAA-CREF proprietary research of participants in employer sponsored plans, 2010-2012. In 2010, the average annual contribution of premium paying participants who took advantage of our advice offering was $11,900 prior to the session and $13,700 after the session, representing an increase of 15 percent. Hypothetically, over a 30-year period, the additional accumulation at retirement will be $204,388. This assumes end-of-month contributions, 6 percent annual rate of return and 3 percent annual premium increase rate.
	3.	Using an advice methodology from Ibbotson Associates, Inc.
	4.	As reported in TIAA-CREF Advice Analytics Dashboard, 2011.
	5.	As reported in TIAA-CREF Advice Analytics Dashboard, 2011.
	6.	Business Innovation Factory “Meeting the Demands of An Aging Population” http://www.businessinnovationfactory.com/iss/innovators/joseph-coughlin