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Most Americans Don't Act On Financial Advice, Says Finance Survey

The majority of Americans do not consistently act on financial advice they receive, according to a recent finance survey.

Survey Results  

The poll, which was conducted by an independent research firm, revealed that only one-third of participants take action on financial advice after they receive it. However, almost one-half of respondents indicated that they are concerned about their financial future.

Personal Advice

James Nichols, senior managing director, advice and planning services at TIAA-CREF, said in a statement that these results do not come as a surprise, as Americans are deluged with a constant stream of advice saying that they should be more mindful of their budget and expenses, put more into savings and plan for retirement. He said that the this generalized advice might not be as helpful as guidance that is tailored to the needs of the individual.

According to an analysis of clients performed by TIAA-CREF, people who receive investment advice that is specifically tailored to their own individual financial situation is more than 60 percent likely to be implemented than guidance that is more general in nature. The analysis revealed that people who received advice from the global firm might have $200,000 more saved for retirement over the course of 30 years.

He added that "we've seen personalized objective advice help drive positive outcomes for our participants," and that in 2011, two-thirds of participants who used TIAA-CREF advice acted on it by either increasing the amount put into savings, reviewing their existing retirement investments or rebalancing their portfolio. Almost half started putting larger amounts into their retirement funds.

One-fifth of participants identified challenges in finding the personalized advice they need, with 51 percent indicating that they are unsure where to begin looking for this input, and 74 percent specifying that they don't know which sources of information are trustworthy.

LifeHealthPro reports that 47 percent of respondents would seek information from their family and friends, 34 percent said they would look to financial services firms, 33 percent of respondents said they would go to their primary lending institutions and another 17 percent would talk to their employers.

Demographic Differences  

Participants contained in the age demographic Generation Y, which involves those 18-34, had a higher fraction of participants interested in obtaining financial advice than any other age group. In addition, four out of 10 respondents specified that they look for this information often. The people at this age were more likely to change their plans after receiving input, and almost 60 percent specified they will probably implement these adjustments using online tools.

Women responding to the poll were more likely than men to run into difficulties when seeking financial advice, with almost 50 percent stating that they do not have the resources to pay for non-biased advice that is tailored to their own needs.

More-than one-third said they don't have the time they would need to find the information they are seeking. However, 90 percent of the women taking part in the poll said that they act on financial advice received at least part of the time.

"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 in the statement. "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."

One trait of the financial markets that would support a desire for personalized advice is the higher correlations that assets have been displaying both during and after the financial crisis, as this information makes diversifying one's retirement portfolio more challenging and information tailored to individual situations can help. 

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