Increased taxes now facing Americans create an educational opportunity for financial advisors, although different demographic groups may have to be approached differently, says a new survey by Nationwide Financial released today.
“According to the survey data, men and women ages 35 to 64 with incomes of $150,000 to $249,000 may represent the ripest sales opportunities for advisors,” says Eric Henderson, senior vice president of life insurance and annuities for Nationwide Financial.
Upper middle-income respondents were more optimistic and receptive to making portfolio adjustments. More than half (52 percent) believe changes can be made to prepare their portfolio for tax changes and half want more information on annuities.
“It is important to keep in mind that most affluent investors will be impacted by the changing landscape,” Henderson says. “Unfortunately, 60 percent of respondents say they either won’t or are not sure if they will meet with a financial advisor to discuss taxes, so it’s up to the advisors to provide proactive counsel to help all their clients understand potential opportunities.”
Survey respondents ages 35 to 54 were less likely to say they understand the tax advantages of annuities, with 56 percent saying they understand versus 73 percent of older respondents saying they understand. In each instance, younger respondents were more likely than older respondents to say they want more information on annuities, life insurance and 401(k) plans.
Middle-aged respondents also are more likely to make portfolio changes, with only 31 percent of the younger group saying they would make no changes compared to 45 percent of those 55 or older.
The survey also revealed women are more optimistic about the impact of new taxes. Only 16 percent expect a significant decrease in household income or asset level compared with 31 percent of men. They also were less likely than men to have met with a financial advisor at the time of the survey to talk about the tax changes (5 percent of women versus 13 percent of men.)
“For most married couples, the wife is more likely to outlive her income, so it is important for both spouses to be active in managing the portfolio,” Henderson says.