Why personalized advice is important when saving for retirement

Why personalized advice is important when saving for retirement


As humans, we often hold a special affinity in our hearts for things that make us feel special. Whether it be as simple as a barista who knows your usual order as soon as your enter the café or as advanced as an email reminder from your mechanic that your car will soon be due for an oil change, we like to have experiences that are custom to us as individuals. And why should that change when it comes to managing our finances?

The financial industry has recently seen a spike in “robo advisors,” or digital platforms that provide automated financial planning services with very little human interaction—or supervision. While it seems like a good idea in theory—helping people gauge where they are or where they should be in terms of retirement is always beneficial—robo adivsors and other online retirement calculators come with some serious glitches.

Can robo advisors replace personalized advice?

To start, robo advisors gather very general information from each user and then make assumptions about savings based on that information—like a 50-year-old person making $75,000 per year should have X amount put away already and be currently saving X much more per month to achieve a financially secure retirement.

You can see the issue here already. The reality is that that scenario isn’t every 50-year-old’s reality, and the quasi-automated calculation could really throw plans off track. If every individual’s situation is different, does it make sense for investing decisions to be made based on generalities and algorithms alone?

There’s simply no substitute for personalized advice when it comes to retirement savings. In fact, according to a recent retirement study conducted by the Aegon Center for Longevity and Retirement, eight in ten U.S. adults agree that they would benefit from having commonly-asked financial questions answered by a professional [1]. Having face-to-face conversations about specifics—budget, debt, goals, etc.—that impact retirement strategies provide a solid background for first, sound planning, and second, sound investing.

Plus, recent studies show that savers might even prefer the face-to-face interaction offered by financial advisors rather than the virtual interactions robo advisors rely on. A survey among Millennials actively saving for retirement found that traditional financial advisors are nearly twice as prevalent as robo advisors [2]. The survey found that the reason for this preference can range from ease of relationship building to goal prioritization as clients’ lives change.

Simply put, personalized advice and service result in higher levels of accountability and flexibility, more informed investment decisions, and a greater likelihood of reaching a financially secure retirement. After all— preparing for and building successful retirement outcomes is deeply personal. Shouldn’t the advice upon which investments and decisions are made be, too?


Nicholas Crary, CPFA - Financial Services Representative - nccrary@pai.com - 800.236.7400 Ext. 3381

Nick is a subject matter expert on 401(k), retirement savings, participant advice, small business 401(k), investments, education on options.