Some are surprised by the numbers, but others see progress.
A quarter of high-end investors have no financial plan, and close to 40% of that group doesn't anticipate building one.
One common reason: apathy.
“Our advice for individuals is to seek help and to really think about ... not only their investment but their financial future,” said Mike Spangler, president of Nationwide Funds, which surveyed 783 potential investors with a minimum of $100,000 in investible assets. “The numbers were jarring for us.”
But the numbers didn't surprise Melissa Joy, director of investments at the Center for Financial Planning Inc., who said that she has seen the dialogue around financial planning strengthen in the past few decades.
“If anything, I would think that the number might have been higher,” she said of those who don't have a financial strategy.
“Financial planning isn't a new concept today like it was 20 years ago. I'm happy to hear that so many people do have a financial plan in place,” Ms. Joy said.
Part of the disparity in financial planning stems from Generation X and Generation Y, Mr. Spangler said.
Far-off prospect
Many of them haven't consulted a professional, possibly because they think that retirement is a far-off prospect or because they gather most of their financial advice through other means, Mr. Spangler said.
More than a third of the respondents said they aren't working with a financial adviser, for reasons including not wanting to pay the associated fees or feeling confident that they can do the planning on their own.
Speaking to a financial planner in person is often more helpful than gathering information solely from financial planning blogs or other web sources, Mr. Spangler said.
“It's hard to reach a destination that you haven't charted a map to,” he said. “Find an adviser that is really looking into your concerns and meeting you on your terms.”
One bright spot is the fact that the savings rate of investors has increased in the post-financial-crisis years, Mr. Spangler said.
More Americans are concerned about paying for health care costs, retirement readiness and saving for their children's education, he said.
Still, shocks in stocks can cause people to become anxious when it comes to savings, Mr. Spangler said.
“We definitely see the market volatility here domestically, as well as geopolitical volatility, as really freezing and creating inertia” among investors, he said.
Duck and cover
Ms. Joy agrees. She said that events such as the government shutdown and the debt ceiling debate can make people “frozen in their tracks” when it comes to saving, which she calls a duck-and-cover strategy.
On the opposite side, when the markets are too rosy, investors become complacent, she said.
“Maybe in the next six to 12 months, when they feel there's not a crisis, they'll come out of the woodwork and have some momentum for making some changes,” Ms. Joy said.
Regardless of these external shocks, the impetus to develop a financial plan is usually triggered by a life event, whether it is preparing for retirement or helping to support a parent.
“Some people can be very confident and capable in planning for their finances,” Ms. Joy said.
“Other people may have the capabilities but don't have the time or have devoted a lot of their time to becoming an expert in pursuing their own passions or career,” she said. “They might want to delegate.”
mdurisin@investmentnews.com Twitter: @megandurisin
