Latest news with #TIAAInstitute
Yahoo
3 days ago
- Business
- Yahoo
Most Americans get these retirement questions wrong. Can you do any better?
Most Americans intend to retire eventually, but few have the knowledge to address the major challenges that often trouble retirees, according to a new survey from the TIAA Institute and the Global Financial Literacy Excellence Center. The study, which surveyed more than 3,300 Americans, found that the average U.S. adult couldn't answer a majority of retirement-related questions. Survey respondents were asked six questions in total, ranging in topic from long-term care needs to lifetime average, respondents answered just 2.2 questions correctly, or 37% of the questions. Fifteen percent of adults surveyed couldn't answer a single question correctly. READ MORE: For Gen Z, retirement feels out of reach. Can advisors bring it closer? Interested in seeing the survey for yourself? Take the quiz below to see how you stack up against the average American. Financial advisors say that lack of knowledge can create problems for Americans looking to retire. But it also presents an opportunity for planners in the wealth management industry. "What I think a planner should do is really focus on education and making sure the client understands things," said Charles "Chuck" Failla, the founder of Sovereign Financial Group in Stamford, Connecticut. "My job is not to say 'Here is the absolute right thing to do,' because it's rarely that clear. But instead, it's to say, 'Here's option A and B, or maybe C, and here's the pros and cons of each one of those.' And if I do my job correctly, then the client, even without decades of financial experience like I have, should be able to make the decision. … And that only comes with education." READ MORE: Ask an Advisor: Is my Social Security strategy outdated? Educating a client on the different options available to them is a crucial part of the job for Failla, but he said that he also doesn't expect clients to become experts themselves. "I could become an expert on drywall, but I have no interest in that, so I hire people. Like, that's not what I want to learn," Failla said. "It's all learnable stuff. But you have to understand, if someone's coming to your office, by definition, they're not … as financially literate as you are." Even for people who would prefer to pay someone to handle their financial planning, Failla said that educating a client on the "why" behind certain decisions and behaviors is crucial to ensuring they stick to the plan. "What type of discipline will that client have if they don't understand why they're doing it, right?" he said. "Education kind of helps them do the right thing, which is, stay the course." In the survey, roughly three-quarters of respondents couldn't correctly answer questions about long-term care costs and Medicare coverage. Those numbers aren't promising, but they might be improving among older Americans. "I think we're seeing a much higher acceptance level of people understanding that they're going to need care. And like anything, it's driven by experience," said Byrke Sestok, a financial advisor at MONECO Advisors in Fairfield, Connecticut. "More and more people that are in their 40s, 50s, 60s, have now been in the position of having to care for an elderly person in their family … and now they're going, 'Well, I know that happened with Mom and Dad, so it's definitely going to happen to me, right?' So, the denial I find is leaving as our generations get older because people are living it." Still, clients can understand the importance of preparing for something like long-term care needs, but that doesn't mean they're equipped with the information to actually do it. That's where advisors come in, Failla said. "I give them the options, and this is an A, B or C option. So, pay for it yourself, pay for it with insurance or let the state pay for it on Medicaid," he said. "And there's, of course, pros and cons to each one of those, right? And we walk them through that to the point they can make their own decision." READ MORE: The 10 cities where retirees receive the highest income Navigating those options can become complicated, especially for clients who aren't in an ideal financial situation, Sestok said. "If you are not in, like, the total green zone, and you're in that yellow zone where you're probably going to have long-term care costs, but you're probably not going to be able to foot the whole bill, then I think there's a real and honest conversation about, 'How do we implement long-term care insurance within your financial situation?'" he said. "It's always better to have some insurance than zero." Clients can certainly benefit by learning more about the options available to them when it comes to something like long-term care, but few people are equipped to effectively make those related financial decisions on their own, Sestok said. "Retirement in general and long-term care specifically, I don't think it's a topic that people should try to assess themselves, unless they really have taken the time to learn a lot about the topic," he said. "They should consult a professional."
Yahoo
3 days ago
- Business
- Yahoo
Most Americans get these retirement questions wrong. Can you do any better?
Most Americans intend to retire eventually, but few have the knowledge to address the major challenges that often trouble retirees, according to a new survey from the TIAA Institute and the Global Financial Literacy Excellence Center. The study, which surveyed more than 3,300 Americans, found that the average U.S. adult couldn't answer a majority of retirement-related questions. Survey respondents were asked six questions in total, ranging in topic from long-term care needs to lifetime average, respondents answered just 2.2 questions correctly, or 37% of the questions. Fifteen percent of adults surveyed couldn't answer a single question correctly. READ MORE: For Gen Z, retirement feels out of reach. Can advisors bring it closer? Interested in seeing the survey for yourself? Take the quiz below to see how you stack up against the average American. Financial advisors say that lack of knowledge can create problems for Americans looking to retire. But it also presents an opportunity for planners in the wealth management industry. "What I think a planner should do is really focus on education and making sure the client understands things," said Charles "Chuck" Failla, the founder of Sovereign Financial Group in Stamford, Connecticut. "My job is not to say 'Here is the absolute right thing to do,' because it's rarely that clear. But instead, it's to say, 'Here's option A and B, or maybe C, and here's the pros and cons of each one of those.' And if I do my job correctly, then the client, even without decades of financial experience like I have, should be able to make the decision. … And that only comes with education." READ MORE: Ask an Advisor: Is my Social Security strategy outdated? Educating a client on the different options available to them is a crucial part of the job for Failla, but he said that he also doesn't expect clients to become experts themselves. "I could become an expert on drywall, but I have no interest in that, so I hire people. Like, that's not what I want to learn," Failla said. "It's all learnable stuff. But you have to understand, if someone's coming to your office, by definition, they're not … as financially literate as you are." Even for people who would prefer to pay someone to handle their financial planning, Failla said that educating a client on the "why" behind certain decisions and behaviors is crucial to ensuring they stick to the plan. "What type of discipline will that client have if they don't understand why they're doing it, right?" he said. "Education kind of helps them do the right thing, which is, stay the course." In the survey, roughly three-quarters of respondents couldn't correctly answer questions about long-term care costs and Medicare coverage. Those numbers aren't promising, but they might be improving among older Americans. "I think we're seeing a much higher acceptance level of people understanding that they're going to need care. And like anything, it's driven by experience," said Byrke Sestok, a financial advisor at MONECO Advisors in Fairfield, Connecticut. "More and more people that are in their 40s, 50s, 60s, have now been in the position of having to care for an elderly person in their family … and now they're going, 'Well, I know that happened with Mom and Dad, so it's definitely going to happen to me, right?' So, the denial I find is leaving as our generations get older because people are living it." Still, clients can understand the importance of preparing for something like long-term care needs, but that doesn't mean they're equipped with the information to actually do it. That's where advisors come in, Failla said. "I give them the options, and this is an A, B or C option. So, pay for it yourself, pay for it with insurance or let the state pay for it on Medicaid," he said. "And there's, of course, pros and cons to each one of those, right? And we walk them through that to the point they can make their own decision." READ MORE: The 10 cities where retirees receive the highest income Navigating those options can become complicated, especially for clients who aren't in an ideal financial situation, Sestok said. "If you are not in, like, the total green zone, and you're in that yellow zone where you're probably going to have long-term care costs, but you're probably not going to be able to foot the whole bill, then I think there's a real and honest conversation about, 'How do we implement long-term care insurance within your financial situation?'" he said. "It's always better to have some insurance than zero." Clients can certainly benefit by learning more about the options available to them when it comes to something like long-term care, but few people are equipped to effectively make those related financial decisions on their own, Sestok said. "Retirement in general and long-term care specifically, I don't think it's a topic that people should try to assess themselves, unless they really have taken the time to learn a lot about the topic," he said. "They should consult a professional."
Forbes
23-04-2025
- Business
- Forbes
Mind The Financial Literacy Gap: Coachella's Viral BNPL Moment Is An Industry Wake-Up Call
This year, Coachella wasn't just a showcase for the biggest names in music. It was a flashpoint in the growing tension between fintech innovation and financial literacy. When festivalgoers revealed they had used Buy Now, Pay Later (BNPL) services to cover the cost of tickets, social media lit up with finger-wagging commentary, viral headlines, and plenty of moral panic. Meanwhile, DoorDash quietly rolled out a similar installment option, signaling just how quickly BNPL has become embedded in everyday spending. But the real question isn't whether BNPL is being overused. It's why so many people feel the need to rely on installment plans for basic expenses in the first place. That's not a payments problem. It's a system problem, rooted in the fact that millions of Americans have never been taught how to navigate credit, debt, or financial decision-making with confidence. BNPL Isn't the Issue, Misunderstanding It Is The past two decades of payments and fintech innovation show how the right technologies can expand access, improve transparency, and offer greater financial flexibility—especially for consumers underserved by traditional credit models. BNPL, when done right, is one of those innovations. It's not inherently risky or irresponsible. It's simply a tool—one that, for many users, offers clearer terms and better short-term control than payday loans, for example. But like any financial product, it requires informed usage. Unfortunately, the average consumer is far from equipped. According to a 2023 TIAA Institute study, U.S. adults answered only 48% of financial literacy questions correctly, and only 18% could handle questions related to risk. That's a national failure. As we mark National Financial Capability Month—aka National Financial Literacy Month—this should worry regulators far more than whether someone financed a festival wristband. The Real Risk: Meeting Consumer Confusion with Judgment The backlash we're seeing against BNPL, and against the people using it, is rooted in a dangerous assumption: that financial tools should be foolproof. That if a product can be misused, it shouldn't exist. By that logic, we'd need to eliminate student loans, even mortgages. But we don't. We expect people to navigate them with minimal education and support. That's precisely the problem, and exactly why financial literacy needs to be treated as a foundational skill, not an afterthought. BNPL should be no exception. The reality is that when confusion is met with judgment instead of guidance, we widen the trust gap between financial institutions and the communities they serve. Regulation Alone Won't Solve This Let's be clear: smart regulation is always welcome in this industry. Transparency, responsible underwriting, and clear disclosures should be the baseline for every fintech offering—BNPL or otherwise. Providers have a duty to act in good faith, especially when serving younger or underserved consumers. But regulation isn't a substitute for education. Nor should it become a bludgeon that stifles innovation. The U.S. financial regulatory framework is already struggling to keep up with technology. What we need is a more collaborative model, one that brings regulators, fintech leaders, educators, and consumer advocates together to design solutions that work in the real world. The finance industry could start by treating financial literacy the same way we teach driver's education: essential, standardized, and required before taking the wheel. Empower people to ask better questions, and we'll get better answers. BNPL Can Be a Catalyst, Not a Cautionary Tale There's a healthier, more constructive path forward, and BNPL can be part of it. When installment solutions are built on existing cards, offer zero or low interest, and include transparent repayment structures, they become a bridge—not a trap. More importantly, they can become an entry point into deeper financial capability, if we build the right educational scaffolding around them. That's where regulators, fintech platforms, and educators must work in lockstep: not to eliminate risk, but to equip consumers to understand it. So instead of judging consumers for using BNPL to see Travis Scott or Lady Gaga, let's start asking why they didn't fully understand what they were signing up for, and how we can fix that. The future of financial health depends not just on the products we build, but on the knowledge we provide.
Yahoo
01-04-2025
- Business
- Yahoo
Do clients trust you? Depends on who they — and you — are
No two clients are the same when it comes to financial advising, but certain demographics can play a significant role in how investors view their relationships with financial advisors. Factors like age, gender and race can influence how clients view their advisor's role and their preferred methods of communication, according to new research from the TIAA Institute and the MIT AgeLab. Advisors looking to expand their practices should add more emphasis on client demographics in their approaches, the researchers wrote. "While traditional advice remains essential, we're seeing clear signals that the future of financial advice must be more personalized, demographically focused and accessible across multiple channels," Pam Feldstein, executive vice president at TIAA Advice Solutions, wrote in the study. "As an industry, our opportunity lies in bridging proven advisory expertise with evolving client preferences to create more meaningful and impactful financial relationships." The study, which surveyed over 1,000 individuals about their advice-seeking behavior and views of financial advisors, found that just 40% of people are satisfied with the financial advice they receive, pointing to a crucial gap between the advice given and client expectations. Across demographics, clients primarily seek out financial advice for retirement planning and saving. But researchers found that the timeline for that behavior can vary significantly between men and women. "Women prioritize retirement savings advice at career start and near retirement, while experiencing a concerning decline in advice-seeking during peak earning years (ages 25–54). This stage often aligns with caregiving and sandwich generation roles that present new financial challenges and a deeper need for advice," the researchers wrote. "Men, conversely, consistently seek investment and tax planning advice at higher rates than women, though both genders equally pursue debt management guidance." READ MORE: Fiduciary standard drives client trust in advisors: Cerulli research Demographics can also shape the attributes that matter most to a client when looking for a financial advisor. Women consistently rate factors like professional expertise, reputation and years of experience more highly than men when describing what they value in an advisor. Men, meanwhile, place more importance on advisor relatability than women. Race can also play a role in what clients look for in a potential advisor. Black clients place a higher priority on cost considerations than any other group in the survey. Asian Americans and Pacific Islanders, as well as Hispanics, place slightly less importance on cost considerations compared to Black clients, while white clients place the least importance on advisor costs. Demographics are especially impactful when it comes to client communication, advisors say. "We tend to see our younger clients as ones that really crave financial education as we have a natural emphasis on Generation X and millennial clients," said Thomas Van Spankeren, a principal and financial advisor at RISE Investment Management in Chicago. "Their communication style is often digital, but one would be surprised to learn that they also enjoy a hand-written letter." READ MORE: Women face unique retirement challenges — but advisors can help Across generations, 62% of people surveyed said they prefer to communicate over a phone call with an advisor, according to TIAA and MIT research. That preference increases with age. Just 50% of clients aged 18 to 34 said they prefer talking to an advisor over a phone call, with that figure jumping to over 70% for clients 55 and up. "Most of the clients I have that are 60-plus and local like to visit my office in person and do face to face as much as possible, whereas clients that I have that are in their 30s or early 40s, also nearby, will almost always do a Zoom or a virtual [meeting]. It's just the way people communicate," said Ross Dugas, founder of Scientific Financial in Houston. Advisors looking to attract clients of all ages should take a "hybrid approach" to communication, mindful of differing preferences between different age groups, the researchers wrote in their study. The importance of identity can go both ways, Dugas said. A client looking for a financial advisor is often looking for someone who they feel can understand their situation. Sometimes that comes down to things like gender and age, but it can also include more specific experiences that an advisor shares with a client. Dugas, who worked as an engineer for over a decade, said that many of his clients gravitate toward his practice because of their shared background in engineering and science. READ MORE: 5 lessons for advisors working with high net worth clients "I have a lot of scientists and technical folks that feel comfortable with me, just because … I understand where they're coming from, and we kind of have that common basis of just the way that we think," he said. "We're looking at a trust and an identity factor, and [when] you're going to get into someone's financial information, that's very, very sensitive, and it's important that you develop that trust." Researchers at TIAA and MIT agree. "The need for trust is universal," the researchers wrote. "The fundamental elements of trust — expertise, reputation and the ability to explain complex concepts clearly — remain consistently valued in advisory relationships and are universal across all demographics and income levels." Sign in to access your portfolio
