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Stats & Facts
OBSERVER
Closing the Knowledge Gap
Social Security
is a complex thing
for your clients. At what age should they
start benefits? What are the rules?
Turns out, Americans surveyed by
FPA and AARP aren’t very knowledgeable, and they’re not going to planners
or other experts for help.
“The survey sends a clear message,”
Jeannine English, president of AARP,
said at a press conference Sept. 28
at the FPA Annual Conference—BE
Boston 2015. “Most future beneficiaries lack the knowledge they need to
make good decisions they need about
Social Security.”
This knowledge gap could cost future
beneficiaries many thousands of dollars,
and it not only affects them but their
loved ones as well.
“I know from hands-on experience
that Social Security is the cornerstone
of any retirement plan,” said FPA
President Ed Gjertsen, CFP®. “If it’s
not addressed properly, beneficiaries
and families can really miss out.”
But the consumers surveyed think
they know Social Security. Nearly a half
of those surveyed said they are “very” or
“somewhat” knowledgeable about how
their benefits will be determined.
But the reality is, many Americans
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can’t afford a financial planner, so
how do we close the knowledge gap
for them? That’s a question Sharon
Epperson, senior personal finance correspondent at CNBC, posed to a panel
of professionals at the closing general
session at the FPA Annual Conference.
“Financial planners are key in helping
your clients and consumers know the
information about Social Security in
order to make the best decisions for
them,” said Gary Koenig, vice-president
of financial security at the AARP Public
Policy Institute.
Although planners won’t always be
able to give all the goods away for free,
Koenig suggested they get involved
with virtual and in-person “town
halls” AARP is planning to host across
the nation for consumers who don’t
have access to a planner.
CFP® professionals were also
surveyed. After combining the data
on what consumers said and what
CFP® professionals said regarding Social
Security, key takeaways include:
CFP® professionals expect that
Social Security will be a lower
percentage of retirement income
for their clients than consumers
estimate, reflecting the data showing
Journal of Financial Planning | November 2015
that those who used a professional
financial adviser are more affluent
than those who had not.
Consumers think they are more
knowledgeable about how their Social
Security benefits are determined than
CFP® professionals believe their clients
are; 9 percent of consumers say they are
very knowledgeable compared to 1 percent of CFP® professionals who believe
their clients are very knowledgeable.
CFP® professionals are twice as
likely to say they are very confident
that the Social Security system will
provide their clients with benefits at
least equal in value to those received
by today’s retirees (14 percent versus 7
percent of consumers).
CFP® professionals were far more
likely to correctly identify 10 to 20
years as the length of time the trust
fund would remain solvent (50 percent
versus 27 percent for consumers),
whereas consumers thought it would be
exhausted earlier.
Nearly three in 10 CFP® professionals
recommend that clients wait to claim
benefits until age 70, but only 13 percent
of consumers plan to wait that long.
To read the full report, visit www.
aarp.org/SocialSecurityPlanning.
FPAJournal.org
Stats & Facts
OBSERVER
STAT BANK
“
Today’s women are
more educated than
ever and enjoy career
opportunities that
our grandmothers’
generation never even
dreamed possible.
Despite progress
made, women of
all ages are at a
distinct disadvantage
compared to men in
terms of achieving
a financially secure
retirement. The brutal
reality is that the
percentage of women
aged 65 and older who
are living in poverty is
nearly double than that
of men.
”
—Catherine Collinson,
Transamerica contributor,
Forbes
9.7 times…The
likelihood that clients are
willing to cooperate with
adviser recommendations
when their advisers are
seen as empathetic and
interested. (FPA RPI™ 2014 Trends in Client
Communication Study)
7.9…Percentage assets
grew between 2013 and
2015 among advisers working in teams. Solo advisers
had a 7.1 percent growth in
assets. (InvestmentNews)
$104,000…
Median savings for households headed by somebody
age 55 to 64, which
translates to an inflationprotected annuity of $310.
(Government Accountability Office)
46...Percentage of
American workers who
have less than $10,000
saved for retirement. (EBRI)
29...Percentage of
$6.6 trillion…The
amount American workers
are short of what they need
to retire comfortably.
(Boston College Center for Retirement Research)
2/3…Amount of workers age 50 and older who
say their ideal retirement
includes part-time work.
(Merrill Lynch Age Wave Survey)
1/6…The number of
elderly Americans who are
already living below the
federal poverty level. (U.S. Census
Bureau)
< Half…Percentage
of spouses who don’t work
who say they are saving for
retirement habitually or
even occasionally. (Transamerica
Center for Retirement Studies)
24…Percentage of
American workers not currently saving for retirement
who are unable to do so,
because they have no idea
how to begin.
American workers who
have less than $1,000 saved
for retirement. (EBRI)
(2015 LifeCare/FPA Financial Confidence of American
26…Percentage of
$24,671…Total
Americans workers who say
how much they are saving
and spending is a primary
source of stress. (2015 LifeCare/FPA
Workers Survey)
average health care costs for
a typical four-person family
in 2015, up from $13,382 in
2006. (Milliman Medical Index/Money.com)
Financial Confidence of American Workers Survey)
FPAJournal.org
November 2015 | Journal of Financial Planning
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OBSERVER
Stats & Facts
If the CIA Can Tweet, So Can You
Marketing
expert David Meerman Scott informed and entertained
attendees of the FPA Annual Conference— BE Boston 2015 by taking
a selfie with the general session
audience and immediately posting it
to Twitter in an example of how effective—and easy—real time social media
communication can be. He also shared
these five marketing lessons:
Provide great content. Generate
helpful blog posts and Tweet links. As
an adviser, you may be concerned about
regulations, but to give some perspective, Meerman Scott showed examples
of the CIA tweeting, so you shouldn’t
have any excuse not to use Twitter, too.
“Yes you have regulations, yes you have
to be ethical, but that doesn’t mean you
can’t communicate,” Meerman Scott said.
Connect with your markets via
social media. Align the way you
sell with the way people buy. A good
example of this is Donald Trump.
Meerman Scott emphasized he wasn’t
endorsing Trump politically but said
Trump is “crushing it” in terms of social
media connection.
For example, when Trump’s phone
number was published by Gawker,
instead of changing his number, Trump
changed his voicemail message to be
a campaign tool, driving callers to his
Twitter page and his campaign website.
Real time is key. Planners know about
real time when it comes to markets and
the news, but when it comes
to marketing, they tend to
look to past information to
make plans for the future,
according to Meerman Scott.
“If you’re spending all
your time in the past and the
future, you’re not spending
any time in right now,” he
said. And that’s a problem,
because potential clients are
looking for you right now.
Bring humanity to the
organization. Don’t ask your
potential clients to first fill
out a form before you give
them access to your content.
Make your content free and encourage
followers to share it, suggests Meerman
Scott.
Also, don’t describe your firm in
technical, hard-to-digest terms. Eliminate
stock photos and hire a real photographer
to take pictures of you and your firm.
Manage your fear. The best way
to manage your fear is to change
your mindset. Think of it in terms of
fitness, Meerman Scott said, and be
diligent and consistent.
“If you want to get fit and run
around a stage like I do,” Meerman
Scott said. “You can’t dabble, you have
to truly become fit.”
And it’s the same thing with marketing, he said.
Robo-advisers will not eliminate financial planners … while software can
“give
rough projections of financial markets, they can never know the wants
and needs of clients.
” —Futurist Michio Kaku, speaking to attendees at the FPA Annual Conference—BE Boston 2015
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Journal of Financial Planning | November 2015
FPAJournal.org
Stats & Facts
OBSERVER
Teams do better because they hold each other accountable about
“things
that cause firms to do best. It’s similar to the benefits of having
an exercise buddy. —Pat Kennedy, co-founder of PriceMetrix, InvestmentNews
”
Millennials: Key to Your Future?
According
recent InvestmentNews survey, 66 percent of
children fire their parents’ financial
adviser after inheriting the wealth
those advisers helped manage.
That doesn’t have to be the case,
said Eric Roberge, CFP®, in his
presentation at the FPA Annual
Conference—BE Boston 2015 titled
“Engaging Millennials: The Rubik’s
Cube of Financial Planning.”
Roberge said that in the coming
30 years, more than $30 trillion in
assets are going to pass down to the
millennial and Gen X generations,
but planners aren’t building relationships with their clients’ children.
They should start.
Though millennials may not have
the type of assets you want to manage
now, as Roberge noted, they soon
will. They need your services— but
not the same thing you may deliver to
your current clients.
“Retirement planning, Social
Security, taxes—delivering a
process like that to a millennial is
not going to engage them,” Roberge
explained.
What you want to do is know the
types of problems millennials want to
tackle:
Student loan repayment strategies. Mortgage-sized student loans
FPAJournal.org
to a
plague many millennial professionals
and they want to know how to best
pay them back or get them forgiven.
Short-term goal planning. They
want to plan for the next one to five
years—things like paying down debt,
buying a home, or starting a family.
They’re not yet interested in talking
about retirement.
Entrepreneurship and freelancing. Some millennials don’t work
traditional 9-to-5 jobs anymore; they
figure out a way to freelance or start
their own business. They need help
navigating these things.
Maximizing company benefits.
Those who do have traditional 9-to-5
jobs want to know how to maximize
the benefits their company offers.
They shouldn’t have to talk to HR
when they have you.
Redefining retirement. This
generation doesn’t see itself stop-
ping working at age 65. They want
to live today—take trips to Europe,
have financial freedom—while still
planning responsibly for tomorrow.
Roberge recommends planners
begin with new revenue models. For
example, he charges an upfront fee
and a monthly retainer, versus an
AUM model. Also, show millennials
who you are via professional videos
on your website. Use video conferencing and embrace robo-advisers for
this generation.
“If we are not where the puck is
going to be—where the millennials
are now,” Roberge said, “we’re going
to be too late.”
Look for Roberge’s presentation
and several other FPA Annual
Conference sessions to be available
via on-demand video. Learn more
at OneFPA.org/PDC, and click on
“Virtual Learning.”
November 2015 | Journal of Financial Planning
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