Advisers Say Clients Are not Saving Enough

More than three-fourths of advisers said that not saving enough was the biggest 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 recommend to clients are 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%).  

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.”