Financial advisors are missing the mark when it comes to high-net-worth clients nearing retirement—at least those are the findings of The Phoenix Companies’ recently released seventh annual Wealth Survey. Although few high-net-worth investors are prepared for the kind of retirement they expect, advisors continue to focus on wealth accumulation at the expense of long-term financial planning, the survey says. It’s an important point for those catering to the very wealthy, considering that the median age of the country’s approximately 8.9 million high-net-worth individuals is 57.
The survey results showed that high-net-worth investors are worried about the future, and may have retirement goals in mind, but haven’t achieved these goals, and often enough, haven’t even received help with them from their advisors. Specifically, while 73 percent of high-net-worth investors report getting investing advice from their advisors, only 47 percent say they are receiving help on retirement planning – an 11 point drop from 2004, when the question was first asked. Only 33 percent receive tax planning advice, down from 48 percent in 2004; only 31 percent were advised on estate planning, down slightly from 2004; and only half – 49 percent – get advice on asset allocation, the most basic strategy for building wealth over the long-term.
And this considering that, well over 80 percent said that assuring a comfortable standard of living in retirement, making sure they don’t run out of money in retirement, protecting their estate from taxes and minimizing taxes are all important goals.
Phoenix speculates that one reason advisors are emphasizing investment advice at the expense of financial planning is that they are more likely to focus on providing a wider range of products and services in down or stagnant markets, but quickly return to investments when the market improves, which it generally has this year.
There could be consequences for advisors. While overall satisfaction with advisors was relatively high – 83 percent said they were satisfied, very satisfied or extremely satisfied with their advisors – one in ten respondents plans to look for a new financial advisor within the next year. Of those that do plan to look for a new advisor, 41 percent cited poor investment returns, 35 percent said the advisor was not proactive and 32 percent said the advisor was difficult to get a hold of – up sharply from 12 percent last year. Some 25 percent said that high fees was the reason they would seek a new advisor.
The 2006 survey, conducted by Harris Interactive during February and March, entailed online interviews with over 1,600 randomly selected individuals with net worth of $1 million or more, minute debts and the value of their primary home.