Economic Optimism On The Rise!

by PATRICIA HolmesPersonal Finance

A larger fraction of Americans consider their financial state to be better than it was a year ago, according to a recent Gallup poll. This is the first time in five years that the share of people who think themselves better off is higher than the amount of people thinking themselves worse off.

Improving Sentiment  

Data provided by the survey reveals that 38 percent of American participants think they are in better shape than one year ago, compared to 34 percent who think their situation has deteriorated. The fraction of people who believe things have improved is at its highest since October 2007. Comparatively, 26 percent state they their situation is unchanged.

“Right now it’s a more or less a dead heat,” Greg McBride, senior financial analyst at personal finance information website Bankrate.com, told U.S. News and World Report. “We’ve seen some improvement given stronger stock market performance, the turn in the housing market, and better news on the job front.”

The recent Gallup poll figures represent a substantial improvement from 2008, when 54 percent of participants said that their situation had deteriorated from the prior year. The following year also created a majority of respondents who felt worse off.

Gallup provided the same survey in May 2012, when 37 percent said their situation was better.

The media outlet reports that two-thirds of consumers predict that they will be in a better place financially one year in the future than they are currently. The fraction of people with this expectation has previously declined to as low as 52 percent during the summer of 2008, as market participants were impacted by the financial crisis and widespread economic challenges.

Economic Predictions  

The U.S. economy will increase its rate of expansion to grow 2.3 percent in 2013, according to the median estimate of economists participating in a USA Today poll. A total of 48 of these market experts contributed to the survey. Their forecast for next year’s growth is higher than the 1.5 percent that was experienced during the first half of 2012.

In addition, close to two-thirds of those economists expect that the fiscal cliff will be resolved without providing the economy with significant headwinds.

The economic confidence of many market observers has been bolstered in recent weeks as central banks across the world announced plans to provide further stimulus to the global economy through monetary easing. 

Most Americans fail to utilize financial advice, says TIAA-CREF survey

by PATRICIA HolmesPersonal Finance

The majority of people who receive financial advice do not act on it, according to a survey that was recently commissioned by major financial services firm TIAA-CREF and conducted by an independent research firm.

Survey Results

Only one-third of the participants in the survey indicated that after being advised on what to do with their finances, they actually take action. However, almost one-half of these respondents specified that they are worried about their financial futures. 

Personal Advice Crucial 

These findings were not surprising to James Nichols, senior managing director of advice and planning services at TIAA-CREF, who stated that these Americans are facing a constant supply of information on what they should do to reduce their expenses, streamline their budgets, save more and invest effectively for their retirements. 

He added that the best way to go about doing so is different for every individual, and that personalized advice can be very helpful. Individuals who are provided with recommendations that are specifically tailored to their financial situations are more than 60 percent more likely to utilize the advice than people who receive generalized guidance, according to analysis conducted by TIAA-CREF using data on its clients. 

The research conducted by the major financial services provider revealed that people who received financial advice from the company may have as much as $200,000 more saved for their retirement as the result of a 30-year career. 

“We’ve seen personalized objective advice help drive positive outcomes for our participants. Last year, two-thirds of those participants who took advantage of TIAA-CREF’s advice took action – choosing to save more, review their retirement plan portfolio allocation or rebalance their portfolio – and nearly half have increased their contributions to their retirement funds,” Nichols said in a statement. 

Challenges in Finding Advice 

One-fifth of the survey participants specified that they are encountering challenges in finding the financial advice they need, with 51 percent specifying that they don’t know where to seek this information and 74 percent are not sure which sources of financial advice are reliable.

The need that individuals have expressed for personalized financial advice is supported by the general trends displayed by asset markets both during and after the recession, as the various asset classes have moved together in tandem to a higher degree than before. This phenomenon makes it evident that people can benefit from designing an investment portfolio that is specifically tailored to their objectives, risk tolerance and investment horizon.