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Financial Professionals Say Americans Cannot Easily Visualize Financial Dreams

Not saving enough and living beyond means are top obstacles to financial success

July 19, 2011 (Des Moines, Iowa) – Americans continue to show resilience post-financial crisis, but a new study released by the Principal Financial Group® and conducted by Harris Interactive reveals that many still need help to envision their financial dreams. Only one in 10 financial professionals said their clients find it easy to visualize their financial dreams, according to the study.

The second annual advisor study released by The Principal® includes feedback from 632 advisors nationwide including independent broker/dealers, wirehouse and regional brokerage firms, insurance agencies, independent wealth management firms, banks and independent asset management firms.

“Having a dream is just the beginning of planning for a secure financial future,” said Tim Minard, senior vice president of distribution. “This study supports what we've seen reflected in our own business – that people need help to plan for their futures, and advisors are well-equipped to help clients get there.”

More than three-fourths of advisors said that not saving enough was the top roadblock to their clients' success, while living beyond one's means was the biggest problem cited by 73% of advisors. When it comes to financial matters, clients also stretch the truth about living beyond their means (according to 73% of advisors), as well as their level of debt (48%) and risky financial behaviors (34%).

To overcome these obstacles and help clients achieve their financial dreams, the top three actions advisors recommend to clients is to increase their retirement savings (79%), create a financial plan (75%) and/or pay down debt (55%).

Plan, plan, plan

Despite the resounding cry to make plans, the study shows that human nature can get in the way of heeding professional advice. Nearly two-thirds of advisors reported that less than half of their clients have financial plans in place. Another 67% of advisors said that living beyond their means is the chief reason clients veer from their plans, outranking job loss (50%) and life events such as marriage, divorce or birth of a child (45%).

Americans who do work with an advisor are more likely to have taken steps toward financial success, according to an earlier study of consumer financial well-being by The Principal[1]. Those with an advisor were more confident in their ability to achieve their financial dreams than those who did not use an advisor; they were happier with their current financial well-being; more likely to have established goals for the future; more likely to have created a plan; more aware of the money they may need to save for retirement; and more likely to have a financial protection strategy in place.

Dreaming of a secure retirement? Start early!

Eighty-three percent of advisors said financial security in retirement is the top financial dream for their clients. Clients' greatest retirement worries, according to advisors, include outliving their savings (87%), ability to enjoy the same quality of life in retirement (79%), and ability to afford good medical care (70%).

“Fears of an unfulfilled retirement can be avoided by making a plan and sticking to it,” Minard said. ”Through planning – and saving early – a comfortable retirement is a realistic dream.”

To help clients avoid common retirement pitfalls, 79% of advisors recommend increasing retirement savings – and they most often cite saving 17 percent of pay (including employer match) throughout working years in order to have enough income during retirement. But a majority of advisors (56%) indicate that no more than one in four of their clients actually begin saving early enough ” a potentially significant roadblock to achieving the dream.

Challenges, rewards of the advisor job

When it comes to being an advisor, they say their biggest competition is not from other advisors, but human nature. Thirty-five percent said client fears leading to inaction is their most formidable competition, surpassing even competition from other financial advisors (30%). Similarly, client-related issues (managing relationships, retention, getting clients to stick to financial plans, etc.) are cited most often as the greatest pain point (47%), followed by regulatory and compliance issues (21%) and the economy (20%). But while client-related issues can be a source of frustration, working with clients also brings the greatest rewards. According to the survey, the most common reward of being an advisor is an altruistic one, giving clients peace of mind (86%), followed closely by seeing clients achieve financial dreams with their help (82%), and helping clients stay on track to retire when they wish (72%).

Other key survey findings include:

Increased emphasis on financial education and diversification

  • Advisors were significantly more likely this year compared to the same time last year to market their business differently to attract more and different clientele. They have changed their business by diversifying investments (61%) and offering more financial education to clients (56%).
  • Yearly financial dream check-ups for clients are encouraged by three in four advisors.

Client handholding

  • Clients are most likely to pick up the phone and call their advisor for handholding due to dynamic market swings (76%) and financial crises (73%).
  • Other top reasons clients call for reassurance include geopolitical crises (42%), financial products or ideas heard through the grapevine (41%), and hot investment tips (22%).

Tempered economic outlook

  • “Cautious” is how most advisors (56%) describe their continued economic outlook for 2011, although they are twice as likely to say “optimistic” as “pessimistic.”
  • By comparison, American workers said they are somewhat less optimistic, more pessimistic about this year's economic outlook (2nd Quarter Principal Financial Well-Being Index).

Time keeps on ticking, ticking

  • Not having enough time in the day to get their work done is what most frequently keeps advisors awake at night (29%), followed by concerns over market performance (19%) and increased regulatory burdens (16%).
  • If they had one more hour in their day, advisors said they would be most likely to exercise (26%) or to spend more time with their family (25%).

Social media and the advisor

  • Currently, only about one in ten advisors believe that social media is critical to their business currently, has changed the way they do business, and/or is a tool that makes them more productive.

Dream Again

To urge consumers to take financial action, The Principal launched a new integrated financial education campaign in 2011 — Dream Again — with easy-to-use resources to help people put their financial pictures into clear focus and help make their dreams reality. At the heart of the Dream Again campaign is the online planning center ( – Dream Again Planning Center), designed to engage, educate, inspire and motivate Americans to take action. For those who don't have an advisor, the “find an advisor” link on can help.

For more news and insights from The Principal, connect with us on Twitter at

Survey Methodology

The survey of advisors was conducted online by Harris Interactive within the United States between June 6 and June 8, 2011, among a nationwide sample of 632 producing advisors. Respondents for this survey were advisors who have agreed to participate in Harris Interactive surveys. Because the sample includes those who agreed to participate in the Harris Interactive panel, no estimates of theoretical sampling error can be calculated. A full methodology is available.

About the Principal Financial Group

The Principal Financial Group® (The Principal®)[2] is a retirement and global asset management leader. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, investment services and insurance through its diverse family of financial services companies. A member of the FORTUNE 500®, the Principal Financial Group has $327.4 billion in assets under management[3] and serves some 16.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG.

About Harris Interactive

Harris Interactive is one of the world's leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries, including health care, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in more than 215 countries and territories through its North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help clients stay ahead of what's next. For more information, please visit

1Q and 2Q 2011 Principal Financial Well-Being Index, conducted online in Jan.-Feb. and April-May of 2011 with more than 1,100 employees per study
“The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
As of March 31, 2011.

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