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Financial Planning > Behavioral Finance

What Your Clients Are Hiding, and Why

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Are your clients hiding important information from you that could help solve some of their financial woes?

A new survey says they are—particularly secrets involving health, marital and debt problems. Securian Financial Group’s survey, “Client secrets: What People Don’t Tell Their Financial Advisors,” delves into the information clients are withholding and why.

Securian surveyed 720 consumers and found that while 71% of those polled said they share with their advisors “all topics” related to their personal financial situations, nearly one-third (29%) say they haven’t told their advisors about everything that could affect their finances.

Of the 29% who withhold critical information, only 11% say it’s because of a lack of trust.

They survey notes that a “sizable portion” of those clients who withhold critical financial information from their advisors appear to fall in many advisors’ target markets:

  • Nearly one-third are pre-retirees and retirees;
  • Two-thirds are 40 and older;
  • One-fifth are affluent, with $150,000 or more in annual household income, or mass affluent, with $100,000 to $149,000 income; and
  • Among those who are employed, two-thirds are in professional or managerial careers.

What are these clients hiding?

Michelle Hall, manager of market research at Securian says that health and marital difficulties “rank high among the critical subjects clients do not discuss with their advisors,” while a quarter of clients with secrets carry debt their advisors know nothing about.

Clients “may not realize it, but personal matters can profoundly affect a family’s financial stability,” Hall says. Other secrets include employment changes and loans to others.

More than half (52%) of those with secrets say the information is too personal to share, while (45%) say their secrets are outside of their financial strategies and don’t need to be shared. Securian argues these responses “may suggest a lack of education about the benefits of holistic planning and a need to raise awareness about the financial risks associated with not sharing these matters.” Another fifth of those polled say their secrets are too embarrassing to reveal.

But the information some clients withhold could “seriously undermine a financial strategy,” Securian says. For instance, a chronic or critical illness could hamper plans to work beyond retirement age, or marital difficulties that result in divorce almost always create financial setbacks.

Securian also notes that investments made “without consulting a financial professional who has access to sophisticated expertise could become bad bets.”

How do advisors coax these clients into revealing their secrets? Securian counsels advisors to do what they’ve always done: “be patient, educate and look for opportunities to prove they are trustworthy.”

Check out If You Want to Build a Career, Do What’s Best for the Client on ThinkAdvisor.