6 Reasons Why Intelligent People Might Not Have a Financial Advisor

by Matt Roberts, MFM, CFP®, Chief Planning Officer | July 27, 2020

Phone calls are being made all across the country. Some of these calls are to financial planners and are an indication of a nationwide trend. The “buzz,” especially in the middle of a pandemic, has people talking about whether or not they need to get their finances in order. And whether or not they need a financial planner to help them do that.

Even professional organizations like the CFP Board (Certified Financial Planner Board of Standards) have a full-fledged campaign on TV and social media about why you need a planner (see www.letsmakeaplan.org). I doubt they would spend money on a campaign if they didn’t sense a need for it.

And yes, we feel there is a need.

According to a 2019 CNBC and Acorns Invest survey, only 17% of over 2,000 people surveyed said they used a financial advisor. 75% say they manage their own finances with no help from a professional or online service.

For retirees, it’s a similar story. Ken Dychtwald, a gerentologist, psychologist, educator, and consultant who deals with aging-related issues, said the pandemic will force big changes in retirement planning (see full article here). In Dr. Dychtwald’s new book out in July, “What Retirees Want: A Holistic View of Life’s Third Age,” he cites a study in which 8 in 10 retirees said they were willing to seek professional financial advice about retirement planning — but in fact only half as many work with advisors. Overall, only 26% of Americans have a financial advisor he says.

So, what’s the hold up? Why do pre-retirement people and retirees who have complex financial situations not have a financial advisor?

From my perspective, it boils down to one or more of these six main reasons: 

1) Fear and lack of trust 

Many smart people are afraid they are going to be taken advantage of. They have heard horror stories of “advisors” who sell products to them they don’t need…who put their personal gain ahead of truly helping their clients. What they need is a financial planner who is a fiduciary, meaning they will always act in their best interest.

2) They think they already have a financial advisor

Some people have competent investment advisors who adequately manage their portfolios, but these same advisors may not be trained to provide advice in the five other areas of financial planning (retirement planning, risk management, estate planning, cash flow and tax planning, and philanthropic planning).Plus, there are many professionals who might be well-meaning family members, golfing buddies, or old college friends, but who may not have the credentials and training to provide a comprehensive financial plan that will help achieve a secure financial future.

3) They don’t think they need one

A smart person thinks they can figure it out on their own. The truth is, it can be challenging to know everything you need to know about personal/business finances without the help of a trained, credentialed financial planner. Some people say, “I can do it cheaper on my own.” In reality, overlooking one small detail may produce expensive consequences in the long run.

4) Procrastination or denial

Many people think they have a lifetime to figure it all out, and then life throws them a curveball and they realize they should have done some planning. Plus, a person who plans early usually has a better outcome. A colleague of mine once said in regard to financial planning, “The time is now.”

5) They don’t think they are “rich enough” to have an advisor

Many firms have portfolio size recommendations, but overall, most financial planners are willing to at least meet with a person/family to determine if it’s a good fit.

6) Financial matters are too private to share with a professional

Yes, financial matters should be private! But a trusted financial advisor will keep everything confidential and do what’s in your best interest.

According to an InvestmentNews article, in a Nationwide Financial survey of more than 2,000 adults, conducted during the first week of April, 24% of respondents engaged a financial advisor for the first time ever. The survey also found 80% of respondents feel they have lost control of their ability to manage their investments and finances since the COVID-19 pandemic emerged.

With the pandemic, some people searching for advice are asking themselves these questions:

  • Am I going to be OK in retirement?
  • What will the volatile market do to my investments?
  • How much will this pandemic cost me in retirement savings?

1,078 CFP® CERTIFIED FINANCIAL PLANNER™ practitioners were surveyed in a recent CFP Board survey and here are some interesting facts:

  • 64 percent of surveyed CFP® professionals note that their clients are experiencing high or very high levels of stress amidst the global COVID-19 pandemic.
  • Nearly two-thirds of surveyed CFP® professionals (64 percent) agree that more Americans will seek professional financial advice in the wake of COVID-19.
  • Nearly eight in 10 (78 percent) have reported an increase in the volume of inquiries from clients as the COVID-19 pandemic has evolved.
  • Over the time period March 21-April 21, one in three CFP® professionals (34 percent) have seen an increase in inquiries from prospective clients.

According to Kevin R. Keller, CEO of the CFP Board, “The spread of COVID-19 is having a resounding impact on all aspects of our lives. While no one could have predicted the magnitude of this pandemic, research has shown that Americans who enlist the help of a CFP® professional to create a holistic financial plan feel more confident when faced with economic uncertainty.”

Do you know of someone who could use some clarity and understanding of their financial situation? Or is that someone you?

Hiring a credentialed financial planner can provide peace of mind knowing that you are only a phone call away anytime you need answers to your financial questions. Their sound financial education and advice can help lead clients to a coordinated game plan and provide harmony between financial goals and life purposes.

Please send this article to your friends and family who don’t have a financial planner – you’ll be doing them a favor. And let them know Syverson Strege is here and ready to help. Check out Syverson Strege at OnlyWorkForYou.com or call 515-225-6000 to set up a free one-hour consultation.