Investors are prioritizing retirement and short-term cash savings ahead of other financial goals, but most don't get any help with financial advice or education through their employers, according to Financial Planning's latest Financial Wellness Report.
When asked about their financial priorities for the coming year, respondents overwhelmingly identified saving for retirement and building up cash reserves as their leading goals.
Sixty-five percent of respondents cited retirement saving as a priority, and 55% said they are working to build up cash reserves. After that, the list of financial priorities fragments, with 20% of respondents saying they intend to delay large purchases or investments, 19% saying they are focusing on estate planning, and 16% are planning to reduce loan payments to lenders. Other priorities include increasing life insurance, cutting loan interest and cutting taxes by increasing charitable contributions.
About two-thirds of respondents said that they have a 401(k) or a similar retirement plan, while another 49% said they have some form of IRA, with lower numbers reporting that they have a brokerage account or money market account.
The latest survey indicates that employers could do more to support their workers' financial wellness. Sixty-nine percent of respondents said that their employer does not offer access to a financial advisor, and the same number said they don't have a workplace financial literacy program.
Despite the absence of workplace support, 43% of all respondents said that they work with a financial advisor, and that number would likely be higher if employees had access to an advisor through their employers.
Nearly half — 47% — of millennials said that they would be more inclined to work with a financial advisor if their employer offered discounted or free access to such a service. Thirty-one percent of Gen Z respondents said the same.
Other reasons for younger investors not engaging with advisors are more elemental. Sixty-seven percent of millennials and 49% of Gen Z respondents said they would be more likely to enlist the aid of an advisor if they had more assets, while 54% of Gen Zers and 51% of millennials said they'd be more interested in working with an advisor if their finances were more complex.
The rates of respondents who work with a human advisor and those who rely on an app-based planning tool roughly hewed to a predictable generational pattern with boomers the most likely to have a relationship with an advisor, while Gen Zers are the biggest users of financial apps.
Most respondents who work with a financial professional gave their advisors high marks, crediting them for providing helpful financial education and tailoring investment recommendations and planning advice to their specific goals and needs.
Some respondents, however, said that they could use more guidance from their advisors, particularly in the context of retirement and other aspects of long-term financial planning.
"I wish my advisor understood that I'd like his guidance on whether I'm on track to meet my long-term financial goals based on the current value of my portfolio and my current spending rate," one investor said.
Another appealed for empathy from their advisor, saying they wished the advisor understood "how hard it is to save."
Investors report mixed feelings about the impact of COVID. For instance, 41% of respondents said that they feel somewhat or much more pressure to earn money than they did prior to the pandemic. Thirty-two percent said that they are feeling greater pressure to work more now, while 34% said that they are feeling more responsibilities and demands on their time involving home and family than they did before COVID.
On the other hand, 36% of respondents said they have a desire to work less now than before the pandemic, and 42% said they are spending more quality time with family or friends.
Asked about their satisfaction with life in general, 28% of respondents said that it is somewhat (23%) or much (5%) lower than before the pandemic.
As for the financial lessons they have learned during the pandemic, many respondents said they have a strong appreciation for saving and general financial prudence.
"This past year has reinforced my belief that it's best to be a saver instead of a spender so that you have a safety net when hard financial times come," one respondent said. "No material thing is as valuable as the peace of mind that savings provides."
In planning for retirement, 34% of respondents said they expect to retire around the age of 65, while 22% said they anticipate working until they are around 70. Another 22% said they expect to retire after 70 or that they don't expect to retire at all.
"I expect to continue working and making money until I can't work anymore," one respondent says. "Life is like a bicycle — the second you stop, you lose balance."
