With a volatile stock market, potential recession alerts and high inflation, investors are understandably looking to safeguard their assets.
After analyzing its customers’ account data, investment firm Charles Schwab’s research shows investors who work with a financial advisor have saved nearly twice as much for retirement as those who don’t.1
Additionally, those who work with an advisor “displayed a more diversified asset allocation mix and had a lower concentration of assets in particular securities.”1
It’s never too late to speak with a financial advisor. If you’re interested in getting financial advice, consulting a fiduciary financial advisor can be a great first step. That’s why SmartAsset created a free tool to help match you with up to three financial advisors.
Click here to take a quick retirement quiz, and in just a few minutes, find vetted advisors obligated to work in your best interest.
Could Financial Advice Potentially Double Your Retirement Savings?
Analysts at Schwab dug into the data from its customers’ Personal Choice Retirement Accounts® (PCRAs), self-directed brokerage accounts offered within employer sponsored retirement plans.
Here are the average PCRA account balances the study found for the fourth quarter of 2022:
- Plan participants who work with financial advisors: $459,438
- Non-advised participants: $236,2061
Notably, advised participants had an average balance nearly double that of non-advised account holders.
Broken down by age group, here are average Schwab investors’ account balances:
- Baby Boomers (ages 58 to 75): $453,554
- Gen X (ages 42-57): $252,171
- Millennials (ages 30-41): $85,446
Of the total PCRA participants, only 19.2% chose to work with a financial advisor, but of those, roughly half of the advised accounts belonged to the Gen X grouping. Baby Boomers held 30% of the advised accounts and Millennials held 16%.
According to the study, participants who used advisors had more diversified asset allocation mixes and a lower concentration of assets in particular securities. Those with advised accounts also had a higher average number of trades that quarter: 12.8 total vs. 8.9 for non-advised accounts.
Why Work With a Financial Advisor
Working with a financial advisor could help you gain access to a wealth of potential benefits, including their intricate knowledge of financial markets, access to exclusive investment vehicles, and their ability to navigate complex tax and estate planning regulations. All of which could help expand your portfolio, mitigate risk and help alleviate financial stress.
While the idea of seeking professional advice may seem like an unnecessary expense, the cost of not working with a financial advisor could be far greater.
A 2021 AdvisoryHQ study found that the average AUM fee for a $50,000 account was about 1.18% or just $590 with average fee percentages declining as portfolio balances increase. In fact, the study found that the average annual advisor fee for $1 million portfolio was just $10,200.2
Schwab’s study isn’t the only data indicating the potential value of financial advice. Additional research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.3
A Fidelity Study also found that financial advice can add between 1.5% and 4% to account growth over extended periods.4
Russell Investments’ 2023 “Value of an Advisor” study indicates the following as what encompasses the overall value of working with an advisor, rather than just citing average balance data:5
- Active rebalancing of investment portfolios
- Behavioral coaching
- Customized experience and family wealth planning
- Tax-smart planning and investing
How to Find a Vetted Financial Advisor Who Serves Your Area
For many Americans, the reason they’ve never enlisted the help of a financial advisor is they simply don’t know where to find one, or how to evaluate their proficiency and pricing.
That’s why we created a simple tool to help people get financial advice.
This free quiz asks you some questions, then matches you with up to three vetted fiduciary financial advisors who serve your area. You can compare your advisor matches based on their specialty, pricing and more. You even get an introductory call with each of your matches free of charge or obligation, so you can compare them and be fully prepared to pick a financial advisor.
1. “SDBA Indicators Q4 2022 Report“. Charles Schwab. (March 2023).
2. “What are the Average Financial Advisor Fees & Investment Fees Being Charged in 2021?“, AdvisoryHQ (July 2021) The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the AdvisoryHQ study.
3. “Journal of Retirement Study Winter” (2020). The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the Journal of Retirement study.
4. “Why Work With a financial advisor?“, Fidelity (11/1/2021) The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of your future results. Please follow the link to see the methodologies employed in the Fidelity study.
5. “Why Work With A Financial Advisor?“. Russell Investments (April 2023)