Financial advisors need to discuss optimizing Social Security benefits with clientsNationwide Retirement Institute survey finds collecting Social Security is a top client concern for 62 percent of America’s financial advisors
COLUMBUS, Ohio – A new Nationwide Retirement Institute® advisor survey reveals nine in 10 financial advisors strongly believe there is a retirement readiness crisis in America, and they are essential to helping provide a solution. The online survey of 252 financial advisors by The Harris Poll finds that 54 percent of advisors are confident in their clients’ plans to help them live comfortably in retirement, but 62 percent report that determining when to collect Social Security is a frequent concern their clients express.
“Advisors can easily build trust and relationships by starting the Social Security conversation,” said Ron Ransom, senior vice president of integrated relationship strategies for Nationwide. “Social Security is a universal benefit and a primary source of retirement income for many. However, it’s often overlooked in the planning process.”
However, a recent Nationwide Retirement Institute consumer survey revealed only 13 percent of America’s workers have discussed Social Security with a financial advisor. Among those who were counseled by their advisor on Social Security, 40 percent say that they personally initiated the conversation.
Most clients don’t understand the program
Only 25 percent of advisors believe a vast majority of their client base (more than 80 percent) understands the factors that will impact their Social Security income.
Nationwide Retirement Institute’s recent survey of consumers found that 88 percent of older adults don’t know what factors determine the maximum Social Security benefit an individual can receive, and 63 percent of future retirees admit they are not confident in their knowledge of Social Security.
Have the talk or risk losing clients
Most advisors (83 percent) believe their clients expect them to give advice on Social Security, and 42 percent even say their clients would likely find another advisor if they did not help with optimizing Social Security benefits. That number is much larger when you ask consumers – 72 percent of future retirees currently working with a financial advisor say they would likely switch to work with an advisor that can help them maximize their Social Security benefits.
What consumers say about Social Security
According to the consumer survey of 1,013 U.S. adults ages 50 or older who are retired, or plan to retire in the next 10 years, more than a quarter of U.S. adults (27 percent) in retirement say their Social Security payment is less than expected. Plus, one in four (26 percent) future retirees believe they can live comfortably in retirement on Social Security alone.
However, those working with a financial advisor report receiving over 20 percent more in Social Security benefits than those who don’t ($1,500 vs $1,234). Plus, those working with a financial advisor are much more likely than those not working with an advisor to say they were able to do the things they wanted in retirement (83 percent vs 55 percent).
There is an opportunity for advisors to help consumers understand the Social Security program, as many older adults think they are eligible for Social Security benefits sooner than they actually are, including 57 percent of future retirees. Future retirees also expect to receive $1,628 on average as a monthly payment from Social Security. However, that’s almost 30 percent more than what current retirees say they collect ($1,257).
Tools exist for advisors to help clients maximize benefits
Only 37 percent of advisors are very confident in their ability of optimize their clients Social Security income in retirement.
“Advisors may avoid discussing Social Security if they lack confidence in being able to address the nuances and rules that apply to the program,” Ransom said. “Resources and online tools are available today to educate advisors on how to help clients maximize their benefit and achieve personal goals.”
To help advisors start conversations with clients about important claiming decisions, Nationwide’s free Social Security 360 Analyzer® provides a comprehensive look at Social Security filing strategies and helps position Social Security in the context of an individual or family’s retirement income needs.
See how to make the most of your Social Security benefits at www.nationwide.com/ssinsights. Advisors can visit www.nationwidefinancial.com/ssinsights
About the advisor survey
The survey of 252 financial advisors with at least 50 percent of their clients having total investable assets of $250,000 or more was conducted online from Oct. 16-26, 2017. Because the sample is based on those who were invited to participate in the Harris Poll Online research panel, we cannot calculate estimates of theoretical margin of sampling error.
About the consumer survey
The 2018 Social Security Survey was conducted online by The Harris Poll on behalf of Nationwide from January 22 to February 5, 2018 among 1,013 U.S. adults aged 50 or older who currently collect or plan to collect Social Security benefits, and plan to retire within the next 10 years (“Future Retirees”, n=339), retired within the last 10 years (“Recent Retirees”, n=339), or retired more than 10 years ago (“10+ Retirees”, n=335). Data are weighted where necessary on age by gender, race/ethnicity, region, education, income, size of household, marital status, retirement status, and propensity to be online, to bring them in line with their actual proportions in the population.