Advisor Survey: Even the Affluent Lack Financial Awareness

Most advisors we talked to are optimistic about their growth prospects in 2021. But they don’t seem as confident about their clients’ financial acumen. 

Early results of our 5th annual CPA/Wealth Advisor Confidence Survey™  showed more than half of advisors (55%) believe America’s financial literacy has NOT improved over the past year. More than half of advisors (53%) told us the majority of their clients lacked a clearly defined investment policy statement or asset allocation plan when they first started working with them. Further, 51 percent of advisors said the majority of their clients did not know how much retirement income they would need when they first started working with them. And nearly half (47%) of advisors said the plurality of their clients did not have current estate and gift plans in place when they first started working with them.

*** NOTE: We’re keeping the survey open for another week. Give us five minutes of your time and we’ll send you a 20-page pre-publication summary of the findings. See how you stack up to your peers.

This data is even more concerning when you consider the affluence and educational attainment of clients working with high-end financial advisors.

“Some people do not consider financial planning a high priority in their busy lives,” explained respondent Lionel Shipman, a financial and life empowerment professional. “Unfortunately, as life events happen, many will regret not having a financial plan in place and will have to endure the consequences of their lack of prioritization,” Shipman added.

According to our respondents, the biggest reason why Americans don’t update their estate and gift plans are because:

·         They don’t see it as a priority (76%).

·         They think it’s too expensive (55%).

·         They don’t know where to turn for advice (52%).

·         They don’t think they’re old enough (50%).

“People are reluctant to keep a financial, estate and gift plan in place because they mistakenly feel it limits their day to day lifestyle,” observed respondent Jim Stovall. “In reality proper planning brings freedom,” Stovall added.

Survey respondents also revealed that most of their clients did not realize how much their home equity worked against them when it came to financing college tuition. Hypothetically speaking, if families could no longer tap their home equity to pay for higher education, how would higher education costs be impacted?

·         Two thirds of respondents (65%) believed tuition rates would stabilize or start to decline.

·         Only one third (35%) thought tuition would continue rising faster than inflation.

So, what actions can advisors take to help clients feel more confident about reaching their financial goals?

• Nearly all (95%) said go beyond investments.
• More than nine out of ten respondents (91%) said helping clients focus on the long-term and doing more frequent reviews.
• Seven out of eight (88%) said delivering on core expectations.

Perhaps that’s why advisors are contacting their clients more frequently than ever before. Nearly half of respondents (45%) indicated they are communicating with clients multiple times per month, (up from 43% who said so in 2020, 38% in 2019 and 35% in 2018).

Conclusion

Our 2021 survey is a joint initiative of CPA Trendlines, Elite Resource Team, The Financial Awareness Foundation, the Investments & Wealth Institute and HB Publishing & Marketing Company. We don’t make money from the survey or share email addresses or individual responses of participants. We’re just trying to give back to the profession.

What’s your take? I’d like to hear from you.

#practicemanagement, #wealthmanagement, #investorconfidence #economy