Despite the potential benefits of working with a financial planner, a significant portion of U.S. consumers with investable assets of $250,000 or more choose not to engage with one. According to a 2021 consumer survey conducted by Herbers & Company, 34% of these individuals opt out of working with a financial advisor. Notably, the survey also highlights a gender divide: 40% of men report not having a planner, compared to 29% of women.

The survey, which is based on a nationally representative sample of 1,000 consumers with wealth of $250,000 and above, identifies five main reasons people avoid hiring financial planners. These include a preference for independence, skepticism about the value of advice, a lack of perceived need for an advisor, difficulty finding an advisor who shares their values, and a lack of time to research potential candidates.

The Top Five Reasons Consumers Aren’t Hiring Financial Advisors

Understanding why consumers avoid financial advisors is crucial for firms looking to tap into this market. Let’s take a closer look at the five primary factors identified by the survey.

1. Desire for Independence

The most common reason for not hiring a financial advisor is a desire for independence. A significant 52% of advisor-less respondents cited their preference for a DIY (do-it-yourself) approach to financial decision-making. Many also expressed distrust in advisors and financial systems, preferring to maintain control over their financial choices.

2. Quality of Advice

Uncertainty about the quality of advice and the value provided by financial planners is another major deterrent. In the survey, 45% of respondents expressed doubts about whether the advice they would receive would justify the cost, leading them to manage their finances independently.

3. Lack of Perceived Need

For 30% of respondents, there’s simply no perceived need for a financial planner. Some rely on advice from family or friends, while others feel they’ve already achieved their financial goals and don’t require professional guidance.

4. Conflicting Values

Finding a financial advisor who shares their values is a challenge for some consumers. Around 20% of respondents cited conflicting values as a reason for not hiring an advisor. This includes concerns about potential judgment from planners regarding their financial situation. Women, in particular, reported lower average wealth levels and were more likely to experience value conflicts, with one in four women citing this as a reason for not engaging a planner.

5. Time Conflict

Finally, time constraints play a role in deterring some consumers from hiring financial advisors. About 14% of respondents mentioned that the time required to research and vet potential advisors was a significant obstacle.

How Demographics Influence Financial Advisor Engagement

Diving deeper into the data, it’s clear that these five factors vary significantly depending on age, gender, and asset levels.

Age: Older respondents, particularly those 65 and above, are less likely to cite time constraints as a reason for not hiring an advisor. However, the desire for independence tends to increase with age, with more than 60% of respondents aged 75 or older preferring to handle their own finances.

Gender: A gender divide also exists in how consumers approach financial planning. Men, who reported higher average wealth levels than women, were more likely to believe they didn’t need a financial advisor, with about one in three citing sufficient advice from friends or family. In contrast, women were more likely to report value conflicts as a barrier, with one in four expressing concerns about judgment and feelings of inadequacy regarding their financial resources.

Wealth Levels: Interestingly, the wealthiest respondents (those with $6 million or more) were the least likely to cite a desire for independence as a reason for not hiring an advisor, with just over 20% doing so. However, as wealth levels increase, so does the perception of not needing a financial advisor. Nearly 60% of respondents in the $6-million-and-up group reported that they don’t require a planner’s services.

Conclusion

The decision to hire or not hire a financial advisor is influenced by a variety of factors, including a desire for independence, concerns about the quality of advice, perceived lack of need, conflicting values, and time constraints. For financial advisory firms, understanding these motivations is key to developing effective business strategies and reaching untapped markets. By addressing these concerns, firms can better position themselves to serve the needs of consumers who may currently be on the fence about engaging in professional financial advice.