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Published: Friday, 2/23/2007

What Keeps You Awake At Night?

(ARA) - What keeps you awake at night? There are those nagging little questions that can get in the way of anyone s peace of mind: Am I doing all that I should to protect my current lifestyle? Have I done enough to look after the people I love? Am I doing enough to take care of me?

For many, the answer to these late night eye-openers is a resounding no. That s because those typical everyday concerns, such as paying bills, tend to distract people from thinking about their long-terms plans. But working with a financial professional can have a positive impact on people, according to a recent study commissioned by Northwestern Mutual.

We found that those who work with a professional demonstrate more knowledge about financial matters than their counterparts who do not, says Janie Schiltz, vice president of Northwestern Mutual. Moreover, the study reveals that working with a professional can have a positive effect on a person s financial behavior as well.

Making a difference

A professional can show a client how to organize the financial strategy into three buckets: Those matters related to risk and protection, those regarding savings and investing and those regarding retirement and wealth distribution.

On the theoretical side, a financial professional can help make a client aware of how blind spots like loss aversion and mental accounting can affect decisions in real-life financial situations.

Blind spots are a product of emotion and can handicap even the savviest of clients, Schiltz says. When people become aware of them they are much better equipped to build a financially secure future for themselves.

Working with a professional

According to the Northwestern Mutual study, those who work with an advisor tend to have a more aggressive investment mix, better savings habits and more certainty about retirement, Schiltz points out.

For example, according to the study:

* Those with a financial advisor are much less likely to be concerned about the adequacy of their income or savings in retirement, or about the future of Social Security.

* When compared with those who have no advisor, those with one are more likely to have a target retirement age and are more likely to anticipate retiring at 64 or younger.

* Among younger people, those with a financial advisor are more likely to identify clear savings goals for retirement than those with no advisor.

* Those with an advisor make larger annual contributions (approximately twice as much as those with no advisor) toward reaching their financial goals related to retirement, college education, short-term needs and emergencies. $$ Courtesy of ARA Content



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