Would You Ask Your Parents for Financial Advice?
There is an abundance of financial information available today. Between online resources and employer-based assistance, Americans have a wide variety of options for financial advice — sometimes too many options. However, many people may be overlooking decades of wisdom that is only a phone call away.
The most underutilized financial advice may be found at home. According to a recent survey from the National Foundation for Credit Counseling, 64 percent of respondents said they would seek advice from someone other than their parents. Only 20 percent said they would ask Dad for personal financial advice, while just 16 percent would turn to Mom. Speaking with your parents about money may not be the most enjoyable discussion, but there is value to be found with their life experiences.
“Taken together, only slightly more than one-third of respondents would turn to either parent,” said Gail Cunningham, spokeswoman for the NFCC, in a press release. “Younger generations may want to reconsider where they seek financial advice, as the data associated with baby boomers from the NFCC’s 2014 Financial Literacy Survey indicates that the 55-64 age range has their financial act together in many areas associated with successful money management.”
Despite many misconceptions about baby boomers, most of them appear to be financially stable. The survey found that 64 percent gave themselves a grade of A or B on their knowledge of personal finance, and more than half carry no credit card debt over from month to month. In fact, 82 percent said they pay all of their bills on time and have no debts in collection. The only age group to have a better record (91 percent) is the 65 and older crowd. People in the two oldest age groups, 55-64 and those older than 65, also contribute at least 20 percent annually toward their retirement savings.
If you desire financial advice that is outside of your parents’ circle of competence, then value can still be found with professional advice. According to a research study from Financial Engines and Aon Hewitt, participants that received help with their retirement plans earned an average of 3.3 percentage points more per year, net of fees, over the period 2006-2012.
This difference compounded over 20 years could result in 79 percent more wealth. A separate study by Vanguard found similar results, estimating that half of the extra value came from behavioral coaching or simply helping clients maintain a long-term perspective and a disciplined approach.
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