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Financial Planning > Behavioral Finance

Affluent Boomers Value Financial Advisors

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At a time when individuals face uncertain protection of their financial security from employee benefits, Social Security and Medicare, affluent boomers are looking to advisors to help them achieve four main objectives: to keep or enhance their lifestyle, to leave a legacy for their children, to avoid nursing homes and to take away their fear of ending their lives in poverty, a recent survey found.

A significant finding of the survey by Hartford Financial Services is that most boomers don’t depend exclusively on their primary financial advisor to help them manage their assets. Although all those surveyed had a financial advisor that they considered their principal source for financial advice, 61% said this individual helped them to manage less than 80% of their assets.

The good news is that among those individuals, 12% said it was very likely they would allow their advisor to manage more of their assets, and another 26% said it was somewhat likely they would do so.

That finding suggests potentially significant business opportunities for advisors among their existing clients, says Mathew Greenwald, whose research firm in Washington conducted the Hartford study.

The key goal for boomers in first working with a financial advisor is to plan for retirement, according to the study. Of those surveyed, 50% said this was their main financial goal when they first selected their advisor, far ahead of doing a better job of investing (cited by 20%), ensuring they don’t outlive their savings (12%) and estate planning (6%).

When asked about their current relationship with advisors, however, participants revealed a disconnect between the help they were getting and the help they wanted.

For instance, 91% said the main financial activity for which their current advisor provides help was choosing investments that perform well. (See Chart I.) This was followed by putting together a balanced portfolio (89%) and making sure they did not outlive their assets (79%).

Yet when asked, “Which of these activities are most important to you?” the answers were sharply different. For instance, 34% said their key goal was making sure they didn’t outlive their assets, while 24% cited assembling a balanced portfolio and 23% cited investments that do well. (See Chart II.)

Still, most were happy with their advisor. Forty-eight percent said they rated their financial advisor’s performance as excellent.

Working with an advisor also helped build confidence in retirement preparedness. Asked how well prepared they were for retirement, 55% said very well and 39% said somewhat well.

The greatest benefits of working with financial advisors: greater peace of mind, building a road map to the financial future and motivation to do what’s needed to meet retirement goals, Hartford found.

Of individuals surveyed, 83% said peace of mind about current finances was their advisors’ strongest contribution to their life, while 81% said providing a road map of their financial future made the most important impact and 79% said their advisors’ greatest impact was to motivate them to take steps needed to meet retirement goals.

Financial advisors may feel great satisfaction from another finding of Hartford’s study: Clients feel deeply about their relationship with their advisors.

In fact, 41% said their relationship with their financial advisor was even stronger than with their accountant (43% said it was about the same), while 34% said it was stronger than with their clergyman (32% said it was about the same). In addition, 32% said the relationship was stronger than with their lawyers (51%, about the same), while 27% said it was stronger than with their doctor (39%, about the same).

Another major finding: 66% said they are very likely to recommend their advisor to others, and 24% said somewhat likely.

“So, advisors should be asking for referrals,” concludes Greenwald.


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