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Most Lack Liquidity to Handle Financial Emergency
"ST. LOUIS -- Despite Americans' fears of not having enough money to cover sudden expenses resulting from a job loss, an unexpected illness or a major home repair, most of them are unprepared for their future and are not seeking financial advice -- even from their spouses, according to the National Investment Watch Survey by investment firm A.G. Edwards."Our results show the nation's current economic uncertainty is taking its toll on Americans, leaving them worried about their near-term financial stability and lacking the liquidity to handle emergencies," says Sophie Beckmann, A.G. Edwards financial consultant.While almost three out of four consumers (72%) are concerned about having enough cash on hand to cover emergencies or unexpected expenses like a job loss, the two most commonly owned financial products -- retirement plans and life insurance -- do not address this need, according to the survey. Another important, but secondary, concern is being able to save enough money to retire when planned (60%).Yet 75% don't have a financial adviser.Those who do have financial advisers tend to plan more and appear to be much more prepared financially, according to the survey. In fact, those with advisors have portfolios that represent 362% of their income, while those who do not have advisers have portfolios just slightly larger than their annual income (105%), indicating the value of having a good financial plan in place and taking the steps required to meet long-term financial objectives.Spouses: Low on list of consultantsAmericans tend to lean on themselves and their financial advisors even more than they do their spouses as sources of financial and investment advice and information, the research shows. When asked whom they trust most to give advice about their savings and investment strategy, 35% say they trust themselves, followed by external sources such as a financial adviser (16.9%) or a parent or grandparent (16.2%). Only 14% chose their spouse, with more women than men picking their spouses.The most popular time for surveyed couples to discuss financial matters is on the weekends or during dinner. More than twice as many respondents preferred discussing money issues at the end of the day before bed, rather than over coffee in the morning. Just five percent conducted these discussions over e-mail while at work."Knowledge is built through communication, and open and frequent communication garners trust. Couples can achieve that with each other by talking frequently and sharing some financial goals before consulting with a financial advisor who can provide unbiased, objective and proactive advice," Beckmann says.Looming financial needsEven though Americans say they trust themselves the most regarding financial and investment strategy, a variety of financial issues apparently weighs heavily on their minds, the survey showed.Some specific areas of concern include:Unexpected emergencies. The most imminent fear is the lack of cash assets on hand in the event of a job loss or unexpected major expense, with 35% rating it "very important" and 38% rating it "extremely important" to them at this point in their lives. But most have their money in life insurance or retirement plans instead.Retirement. For many, the first point of investment entry is planning for a steady source of income in retirement, although only 35% were participating in a 401(k) plan through their employer. However, Americans are starting to plan for their retirement at a much younger age, with the majority beginning to think about retirement before they even turn 40. Nearly 75% of the respondents said they would like to travel more when their kids move out.Children. The most popular tools for teaching children about finances and managing money include opening a savings account (64%) and encouraging older children to get a job (60%). More than half give their children a regular allowance. While they advise their children to save as much money as possible, many adults aren't adequately planning on their children's behalf. Life insurance is the only widespread plan parents have in place for their children. More than 55% of the parents surveyed stated that they had not even selected a legal guardian for their children.Elder Care. Almost four out of 10 Americans are either currently caring for or anticipate caring for an elderly relative at some point. The majority are at least somewhat concerned about managing these tasks on their own. The primary responsibilities they anticipate managing include household maintenance and acting as a trustee/power of attorney. Those who are currently caring for elderly relatives are usually handling these tasks with no financial or outside assistance.A.G. Edwards Inc. is a financial services holding company whose primary subsidiary is the national investment firm of A.G. Edwards & Sons Inc. A.G. Edwards and its affiliates encompass approximately 7,000 financial consultants in 700 offices nationwide and two European locations in London and Geneva.This article is new this week in The Business Journal's small business how-to section. To see what else is new, click here or click on the "how-to" tab at the top of The Daily Business Journal Online home page."