Nearly half of U.S. adults think financial advisors are expensive and only for the wealthy, even though almost all who use advisors consider them worth it, according to a new survey.
The survey of 1,500 adults by the personal finance website MagnifyMoney found that 30% of consumers have a paid financial advisors, with the most people most likely to pay advisors being those with incomes over $100,000 (55%), college students (41%) and men (35%).
When the survey questioned people who don't have a financial advisor, it found that a lot of people prefer to be do-it-yourselvers. "Of this group, 57% said they prefer to manage their money themselves, while 33% believe it’s too expensive and 25% don’t think they have enough invested assets," the survey report said.
Overall, the survey found that 42% of survey respondents felt advisors are only for the wealthy. But 95% of respondents who use an advisor said they're worth the money, with 61% of this group saying they pay less than $3,000 annually for financial advisor services.
The survey also included the following findings:
• Fair fees are the top priority for consumers looking for a financial advisor. This is followed by being local and showing proven returns. More than 10% of consumers 40 and younger say diversity is important to them—twice as many as older consumers.
• Consumers have many misconceptions about financial advisors. In addition to mistaken beliefs about the cost of advisors, 38% of consumers think online sources and replace an advisor and 25% think you don’t need a financial advisor until you’re middle-aged.
• 45% of those who don’t have a paid financial advisor—and 50% of all consumers—think they typically cost much more than they do. Fee-only advisors typically charge between 0.5% and 1.25% of the assets they manage, but these respondents believe the typical cost is between 5% and 15% or more of assets.
• Overall, 82% of consumers would rather have a financial advisor manage their investments than a robo-advisor. The most likely group to want a robo-advisor is Gen Zers (29%).