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All Financial Advice for the Middle Class is Not Equal

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  • Danielle Winchester
  • Sandra Huston

Abstract

Professional financial advice has been shown to improve the financial well being and stability of US households. However, less than 2% of middle-class households use the services of a financial advisor compared to 60% of affluent households. Many contend that this difference is a result of the middle class’s belief that financial advice is only beneficial to the wealthy. This study is one of the first to empirically test this sentiment, and it finds that middle-class households who are comprehensively managed are more than three times as likely to be well prepared for retirement, more than twice as likely to use their employee benefits appropriately, and nearly twice as likely to have an adequate emergency fund compared to households who do not purchase financial advice. These findings demonstrate that, although goals may differ between middle-class and affluent households, financial advisors have a positive influence on household financial behaviours regardless of economic class. Results from this study suggest that financial advice, particularly comprehensive financial planning services, should be promoted to US middle-class households and that financial planners should be encouraged to serve the middle-class market. Copyright Springer Science+Business Media New York 2015

Suggested Citation

  • Danielle Winchester & Sandra Huston, 2015. "All Financial Advice for the Middle Class is Not Equal," Journal of Consumer Policy, Springer, vol. 38(3), pages 247-264, September.
    • Handle: RePEc:kap:jcopol:v:38:y:2015:i:3:p:247-264
    DOI: 10.1007/s10603-015-9290-8
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    References listed on IDEAS

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