By Hal M. Bundrick
NEW YORK (
)--Save more and stop living beyond your means. Those are two of the most common pieces of advice from financial advisors to clients, according to new research from the Principal Financial Group. More than three-quarters (77%) of advisors surveyed urge their clients to increase retirement savings and create a financial plan (73%). Other guidance frequently offered were: pay down debt (53%), spend less (32%), see an advisor regularly (22%) and create an emergency fund (19%).
Is there a magic number to achieve retirement goals? According to the research, financial advisors say that clients should set back 17% of their pay in order to generate sufficient income during retirement.
Good advice comes with good information, but advisors believe that clients aren't always being totally upfront with them when offering a current view of their financial status. 65% of advisors say clients don't admit living beyond their means and 44% of advisors believe that clients mislead them about the amount of debt they owe. Other common areas where clients are less than forthright include: admitting risky financial behaviors, their level of disposable income, family problems, health issues and their salary.
In spite of many of clients having financial plans, they still aren't saving enough to meet their retirement goals, according to survey respondents. Over half of the financial consultants polled (55%) said that only about one-quarter of clients actually begin saving early enough in their career to achieve the recommended level of retirement savings.
But in spite of all of the challenges in the process, investors relying on guidance from advisors generally are better prepared for retirement, according to additional research compiled for Principal:
- They were significantly more prepared for a comfortable retirement (61%) compared to workers who do not use an advisor (29%)
- They made solid progress toward their long-term financial goals (74%)
- They were more financially confident since they began working with an advisor (73%)
- They were extremely happy with their current financial well-being than employees who do not see a financial professional (54% compared to 29%)
Advisors believe the greatest challenges they face are regulatory and compliance issues (51%), followed by economic uncertainty (39%) and market volatility (37%).
--Written by Hal M. Bundrick