Younger Americans Start Embracing the Value of Paid Financial Advice

People are more likely to be successful at managing their expenses and saving for retirement if they can use the services of a good financial advisor. Financial advisors have many roles, ranging from investing to taxes. Traditionally, many people either planned their finances themselves or only hired an investor who would work on commission, but new surveys show that many young Americans value financial advice enough to actually pay for it.

Millennials Express Growing Interest in Paid Financial Advisors

For a long time, Americans had faith in stock market investors, financial advisors, and other economic experts. However, the stock market crash of the 80s spread a feeling of distrust that is only starting to go away now. Many expressed concerns that financial advisors would not look out for the best interests of their clients, and boomers tended to try to manage their own investments.

The current economic market shows a shift towards paying for financial advice among younger Americans. A survey by the asset management research firm, Cerulli Associates, showed that younger people are more willing to hire financial advisors than any other age group. The survey revealed that almost four out of five investors between the ages of 30 and 39 expressed a desire to pay for financial advisors.

Investors under the age of 30 also had a high percentage of investors who either already used or planned to use paid financial advisors. By way of contrast, only 54 percent of investors over the age of 40 will hire a financial advisor even though they tend to be the demographic that can most easily afford financial help. Older investors seem to be more cautious in such matters, because they remember more about previous investment crises caused by unethical advisors.

In the past, many people would only work with an investor who had a commission because they thought that a commission based payment was the only way to protect their investments. However, many big brokerages are starting to shift to a fee-only payment scheme because the public is now more willing to actually pay their advisors. For example, Merrill Lynch announced their elimination of commission based advisors with the headline, “we’re committed to your best interest, not the status quo.”

This seems to follow a general trend among younger Americans who are willing to admit when they do not know how to do something. Instead of following a do-it-yourself ethic that could lead to financial ruin, millennials seem inclined to trust the experts. The millennial tendency to trust intellectuals instead of attempting to bumble through a complicated field on their own may lead to a growing market for economic advisors.

The increase in young Americans who would like to pay a financial advisor for help also seems to indicate a growing trust in the economic industry. Strong government regulations like the fiduciary rule are being implemented, and these help to ensure that financial advisers do not have conflicts of interest that would put investors at risk. The political battle to pass the fiduciary rule raised awareness about how the government could protect people who pay for financial advice.

The Future of Financial Advice

A lot of this willingness to pay financial advisors seems to hinge on the new regulations that were supposed to be finalized in April. However, Republican legislatures are still attempting to block the fiduciary rule with a lengthy delaying movement. Though young millennials still seem to be generally more interested in paying for investment advice, some may back out if the government does not seem likely to protect their investments any more.

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