Understanding Why People Seek Financial Advice
According to national studies that measure financial education and stability, in 2015 44% of US households had less than three months of savings they could access in case of an emergency, 55% had credit scores high enough to borrow money at reasonable rates, and only 22% were confident about having saved enough money for retirement. Despite these statistics, few US adults use financial advisors to help them navigate the range of financial issues that most people confront. The authors state that if more adults used the services of financial professionals, they would be better equipped to effectively manage their money and avoid problems, especially problems that can lead to financial instability.
In discussing financial advice, the authors are referring to consumers who pay for professional services rather than those who ask friends, colleagues, or family members for guidance. The five most common types of these services are to help (1) manage debt, (2) handle investments and savings, (3) secure a mortgage or a loan, (4) purchase insurance, and (5) address tax planning. Popular academic explanations have historically described the reasons that people might not want to ask financial experts for advice, including the apparent practical and psychological costs.