What prevents people from hiring a financial advisor? — Herbers & Company (2024)

According to a survey by Herbers & Company Research, 34% of U.S. consumers with investable assets of $250,000 or more opt not to work with a financial planner. Here’s why.

What keeps people from hiring financial advisors? According to a survey by Herbers & Company Research, 34% of U.S. consumers with investable assets of $250,000 or more opt not to work with a financial planner. Our survey also reveals a striking gender divide: 40% of men are without a planner, compared with 29% of women.

Based on our nationally representative sample survey of 1,000 consumers with wealth of $250,000 and above, individuals fail to hire planners for five main reasons: A preference for independence, reluctancy about value provided for quality of advice, the absence of a perceived need for an advisor, an inability to find a planner whose values match the consumer’s, and a lack of time to research candidates.

figure 1

The top five major reasons consumers aren’t hiring financial advisors. Our research found 52% of consumers desire independence through a DIY (do-it-yourself) approach.

We believe it’s important for financial advisory firms to understand the addressable market in making business development decisions. So let’s look more closely at these five factors.

Desire for independence. Survey respondents cited a desire to maintain independence in decision-making and a preference for a DIY (do-it-yourself) approach. Some voiced distrust of advisors and financial systems. In all, 52% of advisor-less survey respondents, when asked why they don’t use an advisor, pointed to a desire for independence.

Quality of advice. Asked why they’ve opted not to hire a financial planner, 45% of consumers in our survey cited uncertainty—over the quality of the advisor and whether the value provided was worth the quality of advice.

Lack of perceived need. Many consumers share the perception that they simply don’t need a financial planner. They may receive financial advice from a family member or friend; in some cases, they feel they’ve already achieved their goals and thus don’t require advice. Thirty percent of respondents pointed to a perceived lack of need to explain why they don’t work with a planner.

Conflicting values. Some respondents stated that they’ve been unable to identify an advisor who shares their values. Respondents also cited a fear that planners will be judgmental about the state of their finances. And some said they don’t have enough assets or income to work with an advisor. It’s noteworthy that women respondents reported lower wealth levels on average than men. For instance, 25% of male respondents reported wealth levels between $1.2 million and $2.6 million, compared to just 20% of women. In all, 20% of survey respondents cited conflicting values as a reason they don’t use an advisor.

Time conflict. In all, 14% of consumers cited the time required to find an advisor and then learn the credentials of a financial advisor was holding them back from hiring one.

Figure 2

What consumers who haven’t hired a financial advisor are saying. The following twelve statements reflected the current sentiment of consumers without financial advisor.

Diving a bit deeper, we found that the five factors preventing advisor engagement vary widely based on age, gender, and assets.

Perceived time conflicts fall dramatically for those age 65 or older, which means more time is available to research advisors. But the desire for independence tends to increase with age: Among survey respondents 75 or older, more than 60% cited wanting to handle their own finances as a reason they’re advisor-less. The uncertainty about the quality of advice soars among consumers who are aged 35-64. Interestingly, values conflicts, which are a major reason younger consumers don’t use planners, are negligible among those 65 or older.

Figure 3

The desire for an independent DIY (do-it-yourself) approach increases with age. 64% of consumers over the age of 75+ prefer to handle their own financial affairs.

The survey data reveal a clear gender divide when it comes to seeking out financial advice. While men reported approximately $125,000 to $175,000 more in wealth than women, they were substantially more likely to cite lack of need as a reason for not working with an advisor. About one in three men reported that they get sufficient financial advice from friends or family members or that they have already achieved their financial goals.

Women, meanwhile, are more likely than men to report a conflict in values as the reason for not hiring a financial planner; one in four women cited a values conflict. That category includes feelings of inadequacy and judgment, it should be noted.

Figure 4

One in four women expressed conflicting values as the reason for not hiring a financial advisor. 25% of women fear inadequacy and judgment over their financial resources.

Consumers with assets of $250,000 or more who haven’t already hired an advisor appear to believe they can do an adequate job on their own when it comes to financial decision-making. They value their independence and have a DIY mindset. Interestingly, the wealthiest respondents, those with $6 million or more, were least likely to report a desire for independence, with just over 20% doing so. Compare that with the cohort that reported wealth of between $800,000 and $2.6 million; more than 60% of those respondents said a desire for independence in not using an advisor.

If available time is an obstacle to researching and hiring a financial advisor, those at the highest levels of wealth don’t seem to suffer from the problem. Only 11% reported time conflict as a reason for not hiring an advisor. However, the lack of perceived need for financial advisors generally rose with wealth; nearly 60% of the $6-million-and-up group reported they don’t require the services of a planner.

Figure 5

The highest level of wealth has concerns about the value of financial advice. 56% of the consumers with assets over $6m will not hire a financial advisor due to the uncertainty about the quality of advice they’ll receive for the cost they pay.

Let’s talk →