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Broadening Your Social Security Horizons

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The average worker will receive nearly $400,000 over the course of 20 years, and Social Security is the most significant income stream for a majority of retirees. But while affluent clients may not depend solely on the federal program, they have even more to gain – and lose – due to their collection strategies.

Even so, most Americans aren’t getting professional advice on the matter. A Nationwide Retirement Institute study has shown that less than one-third of future, recent and longtime retirees work with an advisor – and among those who do, fewer than half have received any Social Security advice.

For those respondents who aren’t receiving help, there’s a tremendous opportunity for forward-thinking advisors.

“Most advisors are missing out on a big chunk of potential planning opportunities here,” says Max Zelaya, Vice President of Investments for Wells Fargo Advisors.

Social Security planning may not be a money-maker in and of itself, but it is crucial part of your clients’ overall retirement pictures. Simply put, if you’re not helping them manage this critical income stream, you’re not doing your due diligence – and they may seek counsel somewhere else.

A powerful retirement income stream

So if Social Security is such an important part of a practice, why aren’t more advisors already talking about it?

“It’s not something that comes up much in conversation unless you seek it out,” says Zelaya. “A lot of clients don’t realize how powerful delaying is, for instance, and neither do many advisors because it’s not a part of their daily lives.”

Few working advisors are about to retire themselves, after all, and for many, Social Security is out of sight, out of mind.

That’s a shame, because the well-to-do clients who hire advisors have the most to gain from Social Security strategies.

“High earners pay into the system more than anyone, and they receive a lower percentage of benefits, so they take that money very seriously,” says Jason R. McDonald, Managing Director and Investment Officer with Wells Fargo Advisors.

The maximum annual benefit is $32,244 at full retirement age and $43,562 at 70, representing well over $1 million in potential lifetime benefits. Given the unique status of Social Security, the timing of delayed collections with early 401(k) withdrawals also allows for the best of both worlds – consistently lower taxes and higher overall retirement income. While you can’t capitalize directly on the Social Security part of the equation, a bigger benefit and lower taxes leave you with more money to manage.

Significant business opportunities

Social Security advice also makes it easier to retain current clients and generate more long-term revenue.

“It definitely makes clients ‘stickier’ and more loyal to you because they know you have their best interests at heart,” says McDonald. “I do a lot for my clients I don’t get compensated for, so when I do advise something that’s compensated, they’re much more willing.”

Because Social Security is a hot conversation topic, it’s also an ideal way to generate referrals. Not everyone wants to discuss their investments, trades and total assets, but plenty of people talk Social Security with their friends. If you can steer a client away from an ill-advised early collection – and show them how much they stand to gain – they’ll be more than happy to share the good news.

Finally, Social Security expertise opens doors to collaboration – not just with other advisors and money managers, but with accountants, tax preparers and other financial professionals.

“Social Security has an embedded tax benefit, so there’s an opportunity to gain offshoot business from CPAs,” says Zelaya.

Cutting your teeth

So, you want to start helping more clients with Social Security. How should you bring yourself up to speed?

“In my experience, a lot of investment companies have great literature on it,” says Zelaya. “When wholesalers sponsor something on Social Security, it’s usually very informative.”

The Social Security Administration also maintains an “Information for Financial Planners” page, and the SSA website is a treasure trove of useful, albeit complex information on every nuance and technicality in the book.

For less experienced advisors, however, partnering with a colleague is often the fastest, most direct way to learn. “That’s certainly the way I would start out – partner with people who are experts on Social Security and sit in on meetings with clients,” says McDonald. “Over time you really pick up the nuances, and you become the expert yourself.”

Outreach and Marketing

With sought-after Social Security expertise, it pays to advertise.

“Direct mail is always great, and right now it captures the audience you’re looking for: people of age to collect Social Security,” says Zelaya. Social Security-specific internet ads, newspaper ads and informative flyers also have their place.

Client-facing seminars can be helpful for educational purposes, though they’re not without their drawbacks.

“I’ve done two seminars where we brought in a retired employee from Social Security, and I think that’s a good way to get clients thinking about it,” says McDonald, “What happens, though, is you go through a 90-minute presentation, and maybe 20 percent is applicable to any given attendee.” If you do hold seminars, understand that the breadth of information may confuse clients and prospects, and the end goal is to generate one-on-one meetings.

Ultimately, though, gradual growth based on referrals and walk-ins is the best bet for the Social Security side of your practice.

“It’s better to grow slowly and organically than to try to appeal to the masses,” says McDonald. “You don’t want to be seen as the guy who has the billboard and a sign on the bus stop.” 

Put informative content on your website, help clients and their friends with their filing strategies, and let your reputation as a Social Security expert grow over time.


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