Who do Americans trust for financial advice? The answers may surprise you
May 17, 2023
Many Americans find it a challenge to build a more financially secure future due to higher inflation, rising interest rates and volatile market conditions. And many are, in fact, struggling to grow their wealth. The U.S. median real household income fell 2.9% between 2019 and 2020.1
The official poverty rate rose nearly 1% over the same period. This may not sound like bad news, but in fact it was a reversal after five years of declining poverty levels.1 The following year’s real median household income wasn’t statistically different from 2020, nor was the U.S. rate of poverty.2
The outlook isn’t all bleak, however. U.S. adults who work with a financial professional report much greater certainty in their ability to plan for retirement — 22.9 points higher on a scale of 1 to 100 — over those who do not work with a financial professional. They’re also more confident about managing debt, affording healthcare, dealing with unplanned financial emergencies and their long-term financial security.3
Financial professionals clearly offer significant value, yet they’ll need to do some bridge-building in order to reach prospective middle-income clients who may have the most to gain.
U.S. adults aren’t confident in their financial planning skills
More than 60% of Americans acknowledge a need to improve their approach to financial planning, yet only 35% reported working with a financial professional.3
The decision — or indecision — to seek professional help for their finances can have wide-reaching impacts on family life, work life and overall well-being. Adults who said they worked with a financial professional reported lower levels of financial anxiety. They also said they were happier and had less trouble sleeping.3
Financial uncertainty affects people’s mental and physical health, relationships, job performance and more. In fact, 36% of people reported feeling depressed at least once a month because of financial uncertainty.3 People are losing sleep, missing out on socializing, and even feeling physically ill as a result of financial concerns.
So where do people actually turn for help?
The #1 resource for advice is friends and family
U.S. adults have access to numerous sources of reliable financial planning advice and tools, including government agencies, employer-sponsored resources and financial professionals. Yet their top sources of information don’t reflect such a wealth of information; most appear to prefer convenient access over in-depth knowledge.
In one survey, 33% of parents said they looked to the internet for financial advice, which ranked as the second-highest source of information.4 Some may use online content and tools ranging from interactive games and calculators to informational guides on the basics of investing. Unfortunately, many online resources deliver unreliable or contradictory information. There are more reputable online resources, however, including government websites like:
- Office of Investor Education and Advocacy (Securities and Exchange Commission)
The survey also found that 29% of parents turn to prayer for guidance, the third most-cited resource. Family and friends, however, were far-and-away the number-one source for financial advice for 56% of parents.4
That leaves advisors in fourth place, with just 27% of parents turning to professionals for advice.4
Better understand clients to meet individual needs
What lesson should financial professionals take away from numbers like these? Do individuals really trust that Uncle Bob is the authority on financial planning and investing for retirement, or is there more to it?
Perhaps it’s time to recognize the value that people truly place on relationships and dig deeper to understand the effects of human connection. It’s no surprise that people choose friends and family for advice over educated, credentialed professionals. Maybe they feel better understood by the people in their closest circles — and if not well-understood, at least listened to.
Being heard and understood in terms of values and emotions is so important … yet it’s rarely a substitute for sound financial help. That’s where a financial professional’s approach comes in, and behavioral-focused financial advice can help bridge the gap.
It starts with helping clients understand and articulate their emotions, values and behavioral impulses around finances. When you help clients prioritize their values, you demonstrate a willingness to meet them where they are. Listening actively and teaching them to recognize the effects of financial anxiety can be a differentiator. They’ll likely find great value in someone who’s focused on their individual well-being and can coach them toward more rational financial choices.
Plus, building professional relationships and cultivating client confidence is a key first step in growing client referrals over time.
1Census.gov, Income and Poverty in the United States: 2020, September 2021.
2Census.gov, Income, Poverty and Health Insurance Coverage in the United States: 2021, September 13, 2022.
3Northwestern Mutual, Planning & Progress Study 2022.
4Nationwide, Family Finances Flash Poll Findings, August 2022.