Money can’t buy happiness, but this study indicates paying a financial advisor could potentially help.
Herbers & Company’s inaugural Consumer Financial Behaviors Study polled 1,000 consumers across the U.S. and found people with a specific amount in household assets report higher levels of happiness when working with a financial advisor compared to those who don’t have an advisor.1
But do you need a financial advisor? This important decision can be different for everyone's individual situation.
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Research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.2
A 2022 Northwestern Mutual study found that 62% of U.S. adults admit their financial planning needs improvement. However, only 35% of Americans work with a financial advisor.3
Have This Much Saved? You Might Want to Consider a Financial Advisor
“As individuals move past $1.2 million of assets, those who work with financial advisors rapidly increase in happiness, while those without advisors rapidly become less happy,” the Herbers & Co. study says.
Herbers & Co. is a consultancy firm that specializes in helping independent financial advisory firms grow their businesses.
Here’s a breakdown of the study.
How the Study Measured Happiness
To quantify a respondent’s level of happiness, the survey presented each consumer with a list of 43 questions concerning their daily behaviors and interactions.
The survey also pinpointed four core principles of happiness – fulfillment, intention, impact and gratefulness – and gauged how much respondents identify with each.
All participants in the survey had at least $250,000 in household assets.
The survey found that 66% of respondents who work with a financial advisor reported heightened levels of all four core factors of happiness. Only 34% of people without an advisor identified with those four principles in the same way.
The results of the study also suggest that those with financial advisors experience greater satisfaction outside of their relationship with money.
The study says people who have financial advisors are not only happier with their finances, but also far happier about their personal relationships and their communication with their partners. Additionally, the study says it’s possible that happy couples might be more likely to hire financial advisors. It continues, stating that working with a financial advisor gives couples an opportunity to talk about financial goals, and could thereby give them a happiness boost.
Which High-Net Worth Individuals Were Happiest?
Then again, the more money a person has, the happier they’ll be, right? Not exactly.
Respondents with $1.2 million in household assets reported the same level of happiness, whether they work with a financial advisor or not. Those above that threshold who work with an advisor reported significantly higher levels of happiness than those without advisors.
The largest disparity in happiness was observed among the richest respondents to the survey.
Of high-net-worth individuals with $6 million or more in assets, those with a financial advisor reported the highest levels of happiness across the study. Meanwhile, those without a financial advisor reported the highest levels of unhappiness in the study, despite owning $6 million or more in assets.
The study determined that for those who make it to the top 5% of wealth in the U.S., working with an advisor could mean the difference between being happy with financial success or allowing money to decrease happiness. For those with $1.2 million, it appears that a financial advisor is needed to increase happiness levels when wealth increases above that.
Here’s a Simple Way to Find a Financial Advisor
While the Herbers & Co. survey shows happiness levels fluctuate among people with fewer household assets, regardless of working with an advisor or not, once individuals surpass the $1.2 million mark, those who work with a financial advisor report much higher levels of happiness than those who go it alone.
Regardless of your current assets, if you’re looking for ways to work toward increasing your nest egg, minimizing your taxes or planning your retirement or estate, it could be a good idea to speak with a fiduciary financial advisor.
Fiduciaries are obligated by law to act in your best interest and any potential conflicts of interest must be disclosed.
Yet knowing how to find a vetted fiduciary advisor is, for many, the most confusing task of all. Common Google searches related to the topic reveal a desperate search for direction. “Fiduciary financial advisors near me,” “best fiduciary financial advisor,” and “financial investment advisors near me” are searched hundreds of times per day.
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