Advisors Worried Over Clients, Regulation

By Cyril Tuohy

InsuranceNewsNet

Financial advisors, particularly those working for large broker-dealers, appear to be a content lot when it comes to their financial and physical well-being, and to the financial health of their businesses, according to a new survey. But the happy feelings don't extend to regulators.

More than three quarters of all advisors surveyed rate themselves as either “healthy” or “very healthy," findings from the Principal Financial Well-Being Index of financial advisors show. With stress levels roughly equal to what they were last year, advisors also say their greatest points of concern are the regulatory burdens they face and the inertia brought on by clients who put off taking financial action now to secure their own futures.

The survey was conducted on behalf of the Principal Financial Group online by Harris Interactive within the U.S. between April 29 and May 11. Answers were collected from a sample of 200 group benefit advisors, 213 group retirement advisors and 203 individual retail advisors.

Tim Minard, senior vice president of distribution at Principal, said that financial planning really isn’t very hard, as long as workers invest early and often. The reluctance with which clients approach financial planning means there’s a big opportunity for advisors.

“Financial planning doesn’t have to be so hard. The most effective advisors help clients envision their financial future,” Minard said in a statement. “Advisors develop plans for individual and business owners to save for the long term, invest and grow their nest eggs, protect their assets and manage their income during retirement.”

In a separate interview with InsuranceNewsNet, Minard drew a parallel between advisors trying to coax clients into saving more and doctors trying to help patients stick to healthier diets. “It’s a very similar conversation,” he said.

Advisors most frequent recommendations are that their clients increase their retirement savings (77 percent), create a financial plan (73 percent), pay down debt (53 percent), spend less (32 percent), visit an advisor regularly (22 percent) and save enough for an emergency fund (19 percent).

Financial advisors also are less concerned with competition among themselves. Only 25 percent of advisors said other advisors were their biggest source of competition, down five percentage points from 2011.

Only 9 percent of advisors said they considered “friends and family offering advice” their biggest source of competition, up one percentage point from 2011, and 9 percent considered financial advice gleaned from the Internet as a source of competition. Nearly half of financial advisors are not using social media in their work as a financial planner, the survey also found.

More than one-third (37 percent) of advisors said that issues surrounding regulation will be the biggest force shaping the industry over the next five years, but very few (4 percent) feel threatened by online planning tools.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at Cyril.Tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.