Investors’ confidence in their ability to make good financial decisions is declining, which points to a heightened need for them to work with financial advisors, said John Hancock Retirement.
Only 18% of participants in John Hancock’s Financial Stress Survey said they feel very confident in their ability to make the right financial decisions, a drop from the 23% who felt that way in 2017 and 24% in 2018.
“Clearly, economic factors and thoughts of a recession can impact stress levels and could be a contributing factor [to the decline], as most in the workforce remember, and may even still be recovering from, the last recession,” said Patrick Murphy, CEO at John Hancock Retirement. “Additionally, we know from our survey that job stability and loss remains a worry for workers. These concerns coupled with the general lack of financial literacy and abundance of financial information and options can be overwhelming and create a lack of confidence.”
“One of the most important things we in the financial industry can do is to work to build confidence, one step at a time, by providing personalized education, guidance and advice to individuals based on their own life circumstances,” he added.
Only about one-third of those surveyed considered themselves very knowledgeable about basic financial concepts, such as managing debt and budgeting, according to the survey of 3,547 John Hancock retirement plan participants.
“Fifty-seven percent of respondents agreed they would do more to save for retirement if they had more knowledge on how to prioritize their financial challenges,” the sixth annual survey said.
"We recognize the potential impact that working with a financial representative and participating in a workplace financial wellness program may have on a participant's ability to contribute more significantly to savings and stay on track for retirement,” Murphy said.
The survey also revealed that as many as 35% of respondents are saving nothing for retirement or are only saving between 1% and 5% of their salaries, a figure that John Hancock called concerning.
Although 48% have increased their contributions to retirement savings over the past two years, they still said they are uncertain how much money they will need in retirement.
Concerns about finances and retirement are bad news for employers as well as employees, the survey indicated. Forty-nine percent of respondents said they feel they would be at least somewhat more productive at work if they did not worry about finances while at their jobs, an increase from 43% who felt that way a year ago.