Advisors and consumers agree on need for retirement income planning

New research from The American College of Financial Services indicates that independent financial advisors and consumers are aligned on the need for specialized services, especially those focused on retirement income planning.

According to consumers, it is the most popular service they seek from a financial advisor, and seven in 10 (71.2%) independent advisors desire to advance their specialized knowledge in the many complexities facing the growing retiree market. This alignment speaks to a need not yet met, which is not altogether surprising given the limited coverage of retirement income planning in comprehensive financial planning education.

The demand among independent advisors for advanced education through a professional designation aligns with the strong consumer preference for “evidence of knowledge or certifications” when seeking the services of a professional advisor.

The research substantiates consumers are overwhelmingly seeking guidance with retirement planning more than any other area. These findings come from two studies – The College’s 2022 RIA Growth and Specialized Knowledge Survey comprised of nearly 400 independent or hybrid advisors at registered investment advisor firms and the Granum Center for Financial Security’s 2022 Consumer Survey made up of over 1,150 consumers.

“Continuous learning is critical to the growth and success of investment advisors whose value is more linked to integrated planning services than active security selection.” said Michael Finke, PhD, CFP, professor of Wealth Management and director for the O. Alfred Granum Center for Financial Security at The American College of Financial Services. “Looking at the data, we see a clear need for further education and specialized knowledge in retirement income planning – it is what consumers want, and it is what advisors in the RIA community think is valuable.”

A significant advantage of specialized planning education is that it helps independent advisors position themselves to cater to the unique needs of their clients and deal with more complex cases one is likely to encounter with high-net-worth clients.

 

Key takeaways from the 2022 RIA Growth and Specialized Knowledge Survey show:

 

• Nearly three in five (58.5%) independent advisors at RIAs strongly agree that increased knowledge obtained by pursuing a financial services designation has helped advance their career.
• Professional designations programs (66.6%) are among the most-preferred education formats for applied specialized knowledge.
• Retirement income planning is the area independent advisors most want to grow in advanced expertise, followed closely by issues facing a similar clientele like estate planning and advanced tax planning, and topics such as investment and wealth management.
• Nearly eight in 10 (79.4%) independent advisors surveyed agree they would not have been prepared to provide integrated services without the increased knowledge obtained through pursuing a financial services designation.

 

Among the findings from the Granum Center for Financial Security’s 2022 Consumer Survey:

 

• 27.1% of consumers listed knowledge as the most important attribute when looking for a financial advisor, and half (49.2%) cited knowledge as a top-three desired characteristics in an advisor.
• Three out of 10 consumers (31.3%) chose “understanding how much I can safely spend in retirement” as the number one service they seek from a financial advisor.

• Retirement income planning was the most popular desired service among older and younger consumers alike, and was equally popular among men and women.

 

“Compared to short-form training such as micro-credentialling and premium continuing education modules, more than twice as many independent advisors listed professional designations as a preferred education format,” Finke added. “The demand for advanced education through a professional designation among advisors aligns with the strong consumer preference for ‘evidence of knowledge or certifications’ when seeking the services of a professional advisor.”

 

Specialized planning creates better results for clients by helping to ensure all components of their financial lives work together. Additional comprehensive benefits of specialized knowledge for emerging RIAs include easier recruiting, faster growth, greater sustainability, diverse fee structure options, and the ability to take on more lucrative clients. It also allows for businesses to be less susceptible to challenging market conditions because clients will always need specialized fee-for-service guidance.

 

[2022 RIA Growth and Specialized Knowledge Survey Methodology]

The American College of Financial Services conducted a national online flash survey of nearly 400 independent advisors conducted between May 11 – May 18, 2022. Results from the survey provide insight into what growing RIAs need to build momentum and grow their assets under management (AUM), maximize profitability in an environment dominated by large firms and accelerate their long-term profitability and sustainability.

[Granum Center for Financial Security’s 2022 Consumer Survey Methodology]

The American College O. Alfred Granum Center for Financial Security in collaboration with faculty from The American College Cary M. Maguire Center for Ethics in Financial Services and The American College Center for Women in Financial Services conducted a national online survey of 1,157 individuals with investible financial assets of at least $25,000. Results from the survey provide insight into the changing landscape of consumer demand for financial advice.