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Skipping Social Security Advice Equals Missed Opportunity for Advisors

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Many advisors are not engaging with prospects and clients on Social Security, even though they see it as increasingly important, according to a recent study from Practical Perspectives and GDC Research.

One of the overlying themes of the findings was that very few advisors provide Social Security recommendations to clients, according to Howard Schneider, president of Practical Perspectives.

Advisors who are more actively engaged in Social Security planning and make it a core of their practice are far more likely to indicate that they’re reaping the benefits in their business, the research indicated.

Approximately 90% of advisors have some sort of Social Security advisory in place, but only 26% of the advisors sampled are willing to plan and recommend, according to the research. Thirty percent of advisors will lay out different scenarios and strategies, and 26% will engage and inform their clients, but they won’t offer any type of recommendation.

Advisors are very aware of the growing need for Social Security support. “Most advisors believe clients are very receptive to discussing Social Security,” Schneider said, “but there are challenges that emerge relating to the misconceptions that investors have related to Social Security, which advisors must deal with on a regular basis.”

One of the challenges is the unwillingness of advisors to pay for subscription-based supported preparation, Schneider said. Advisors are willing to either pay a small amount or use free software, like a calculator provided by the Social Security Administration.

Another challenge is the need for support in helping clients identify options, building a knowledge base, integrating the decision with retirement planning and helping clients implement strategies. “There’s a desire for more information, more training, and more ability to engage their clients on this subject,” Schneider said.

However, Dennis Gallant, president of GDC Research, believes there will be a shift in the type of software and tools advisors use to determine claiming strategies. Most advisors turn to the Social Security Administration for data, but Gallant says that it’s not necessarily a great source when trying to determining various claiming strategies.

Gallant also says that the unwillingness to pay might stem from advisors not knowing what type of software or tools to purchase. “A big factor from an advisor standpoint is usability; is it intuitive and simple for me to show my clients?”

Advisors also need to add Social Security support to their regular repertoire of management tools. If they’re not consistent with it, “it lowers their want to put this on the forefront of client engagement,” Schneider said.

“They [advisors] are not fully engaged yet; there’s still a lot they need to learn. There’s still a lot of assistance they need in determining the right approach. One in three advisors … are comfortable in making recommendations on a specific strategy, but I do think we’re moving in the right direction, but it’s an area that needs more attention. Social Security is not just good for retaining clients, but it’s a great prospect and business development tool.” 

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