InvestmentNews.com just published a new survey from Genworth Financial Resources that shows serious deficits in Americans’ financial knowledge, and the potential threat to retirement readiness. No kidding? I’ve personally been seeing this firsthand for about the last 30 years. On the surface, this might not seem too unusual when you consider that you probably don’t know a lot about other professions either.
I know that my knowledge of plumbing or retail management is probably lacking, as well. But the fact that I don’t know much about those things probably won’t affect my life to a great extent. The point being, that most people are very much tuned in to their own careers and professions and actually know very little about all the other professions. The day of the true “Renaissance Man” is long gone; replaced by the specialist.
Based on the survey, women are less likely than men to actively seek out financial knowledge. The breakdown is 61 percent of men and 34 percent of women will seek out financial help.
The survey pointed out that three out of five adults believe there is a correlation between financial literacy and retirement readiness. However, only 46 percent actively seek out financial knowledge.
It seems to make sense that there is a correlation between financial literacy and getting yourself ready for retirement. So, why would more than half the people not seek out help with this? If you’re sick, you go to the doctor; if you’re home needs work, you call a contractor; and if you’re teeth hurt, you go to the dentist. So, why do less than half the people seek out professional financial advice when they are planning for retirement?
The article stated that some reasons for not actively seeking out financial knowledge are because 45 percent of the people said that the complexity of financial products is overwhelming, 37 percent pointed too lack of time, and 18 percent were uncertain about how to get started.
I certainly agree that financial products have gotten more complex. At some point, investment and insurance companies decided that the best way to tell people that they were better was to make sure that they were different. As long as they had different whistles and bells on their products, they would make the claim that they were better. The end result of this race to be different was that it drove up the complexity of financial products. Of course, making things more complicated than necessary is an old trick of many professions. At least we didn’t get to the point of adding Latin to our professional language like the attorneys have.
A lack of time is often a valid excuse in the short term, but becomes an invalid excuse over the long term. Most things in life can be evaluated based on priorities and what’s viewed as most important. Ask yourself what’s more important; going on a week-long vacation, or a “retirement vacation” lasting 20 to 30 years? Most people will find the time to plan a fishing trip, or waste 15 hours a week watching TV, yet can’t find the time to make sure they don’t run out of money in retirement. It always comes back to priorities.
As far as the 18 percent that just don’t know how to get started, I would strongly suggest that they give us a call or find another independent trusted advisor. Not only is it important, but it really can be fun to have peace of mind knowing that everything is taken care of.