More than three-fourths of advisers said that not saving enough was the top roadblock to their clients’ success, while living beyond one’s means was the biggest problem cited by 73% of advisers. When it comes to financial matters, clients also stretch the truth about living beyond their means (according to 73% of advisers), as well as their level of debt (48%) and risky financial behaviors (34%).
To overcome these obstacles and help clients achieve their financial dreams, the top three actions advisers recommended to clients were to increase their retirement savings (79%), create a financial plan (75%) and/or pay down debt (55%).
Nearly two-thirds of advisers reported that less than half of their clients have financial plans in place. Another 67% said that living beyond their means is the chief reason clients veer from their plans, outranking job loss (50%) and life events such as marriage, divorce or birth of a child (45%).
Eighty-three percent of advisers said financial security in retirement is the top financial dream for their clients. Clients’ greatest retirement worries include outliving their savings (87%), ability to enjoy the same quality of life in retirement (79%), and ability to afford good medical care (70%).To help clients avoid common retirement pitfalls, 79% of advisers recommend increasing retirement savings – and they most often cite saving 17% of pay (including employer match) throughout working years in order to have enough income during retirement. But a majority of advisers (56%) indicate that no more than one in four of their clients actually begin saving early enough.
Inactivity an Adviser’s Biggest Competition
Financial professionals responding to a Principal Financial Group survey say their biggest competition is not from other advisers, but human nature. Thirty-five percent said client fears leading to inaction is their most formidable competition, surpassing even competition from other financial advisers (30%). Similarly, client-related issues (managing relationships, retention, getting clients to stick to financial plans, etc.) are cited most often as the greatest pain point (47%), followed by regulatory and compliance issues (21%) and the economy (20%).
However, working with clients also brings the greatest rewards. According to the survey, the most common reward of being an adviser is an altruistic one, giving clients peace of mind (86%), followed closely by seeing clients achieve financial dreams with their help (82%), and helping clients stay on track to retire when they wish (72%).
Advisers were significantly more likely this year compared to the same time last year to market their business differently to attract more and different clientele. They have changed their business by diversifying investments (61%) and offering more financial education to clients (56%). Yearly financial dream check-ups for clients are encouraged by three in four advisers.
Clients are most likely to pick up the phone and call their adviser for handholding due to dynamic market swings (76%) and financial crises (73%). Other top reasons clients call for reassurance include geopolitical crises (42%), financial products or ideas heard through the grapevine (41%), and hot investment tips (22%).
Not having enough time in the day to get their work done is what most frequently keeps advisers awake at night (29%), followed by concerns over market performance (19%) and increased regulatory burdens (16%). If they had one more hour in their day, respondents said they would be most likely to exercise (26%) or to spend more time with their family (25%).
Only about one in ten advisers believe that social media is critical to their business currently, has changed the way they do business, and/or is a tool that makes them more productive.
“Cautious” is how most advisers (56%) describe their continued economic outlook for 2011, although they are twice as likely to say “optimistic” as “pessimistic.”The second annual adviser study released by The Principal includes feedback from 632 financial advisers nationwide including independent broker/dealers, wirehouse and regional brokerage firms, insurance agencies, independent wealth management firms, banks and independent asset management firms.