Why Financial Advisers Aren’t Telling Rich People about Social Security

Recent research from the Spectrem Group found that a majority of rich people (people with a net worth of $1,000,000-$5,000,000) will rely on Social Security benefits for at least 25% of their income in retirement. Unfortunately, the same study found that only about 1/3 of these individuals talked about Social Security with their financial adviser. That is an alarming statistic considering the impact Social Security income has for retirees. So why aren’t more advisers helping their clients with Social Security benefits?

Commissioned Advisers Lack Incentive to Talk about Social Security

It seems that the most common answer may be because most advisers have little to no incentive to do so. Many advisers focus on transactional sales and commissions. They are paid by commissions from selling investment products, not paid to provide advice. A fee-only fiduciary, however, is paid for giving advice and keeping the client’s best interest in mind. Since a fiduciary is paid no matter what choice the client makes, they can give unbiased advice.

Many Advisers Don’t Know How Social Security Fits into Retirement

Another reason that many advisers don’t discuss Social Security with their clients is because they don’t have the knowledge or expertise. Kevin McGarry, director of the Nationwide Retirement Institute stated, “Most advisers don’t have [extensive] knowledge about it, so they don’t bring it up to their clients.” Skills matter today more than ever when it comes to giving financial advice. Make sure your financial professional is educated across many kinds of investments.

Many Clients Don’t ask their Advisers for Social Security Advice

A third reason advisers avoid social security is because their clients don’t expect it. A recently released report by the Nationwide Retirement Institute found up to 62% of future retirees and 77% of recent retirees don’t expect to receive Social Security advice from their advisers.

Without the financial incentive, expertise, or expectation to get advice, this crucial topic is often overlooked. No adviser should overlook something that could be 25% of a client’s income.

Social Security is NOT a “one size fits all” decision. Informed and customized planning can help you maximize your benefits and not risk outliving your assets. Compare your options to understand the advantages and tradeoffs of each to find the best solution for you.

Always Look for a Holistic Financial Planning Solution

An informed retirement strategy includes knowing how to best pull down retirement savings. Your adviser should look at your entire financial picture, not just an IRA or savings account. A smart adviser can help his clients reduce taxes, required distributions, and Medicare costs.

Individuals should consider working with a fiduciary whose interests align with their own. A fiduciary who can understand their goals and needs. Call us for a free consultation and you’ll see that we have the knowledge and expertise to provide holistic financial planning that will empower you to live their best lives.


Published: August 24, 2016

Authored by: Josh Wichman, CFP®, MBA

Direct Phone: 812-602-6319

Email: jrwichman@paynewealthpartners.com

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The information in this material is only as current as the date indicted, and may be superseded by subsequent market events or for other reasons. Statements concerning financial market trends are based on current market conditions, which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. While all information prepared in this document is believed to be accurate, any statements of opinion constitute only current opinions of Payne Wealth Partners, Inc., which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. Accordingly, you should not put undue reliance on these statements.

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