“The first message to advisors is to be very sensitive to the generational differences. For the younger clients who might seem unrealistic, don’t rain on their dreams. Don’t dismiss them,” Keuls said. “Be supportive and taken them through the analysis. Show them what lifestyle changes would have to be made, what savings has to be committed to, in order to achieve it. Support the goal.”
And for the middle-aged clients, a little self-reflection might help, he said.
“If they have such low levels of confidence, then financial advisors aren’t doing their jobs. Make sure they’re educated and grounded in reality,” Keuls said.
The survey also looked at investor satisfaction with their financial advisors, and this area showed room for advisors to improve their communication with their clients.
Overall, 60% of investors said they were very satisfied with their advisors. However, that sandwich generation reported the lowest level of satisfaction—just 46%—which the survey researchers said they believed tracked with this group’s general financial anxiety.
One standout finding was that only 45% of the youngest group of investors, those under 35, felt their advisors showed a real understanding of their full financial picture, possibly related to crypto holdings they may not have disclosed in the first place, the survey said.
“This investing is often done on the side because most advisors don’t work in crypto. So advisors aren’t eager to discuss it because the firm doesn’t deal with it,” Keuls commented.
But since successful planning requires a full understanding of an investors goals and investments, probing for the full picture may require more effort for younger clients before moving to an analysis and making recommendations, the survey said.
Helping clients understand the realities of investment returns and drawdown rates is another area where advisors should up their game, as 26% of participants said their advisors had not discussed long-term return expectations and withdrawal rates within the last 12 months.
While only 20% of advisors said they expected returns to be 10% or more per year, 59% of investors said they did expect their returns to be 10% or more, and a full 40% expected their returns to be more than 25%.
On the withdrawal side, investors ranked inflation and market volatility being the greatest risks to their portfolios, while longevity risk was the number one concern among advisors.
One piece of good news is that advisors don’t seem to suffer from the same aspirations as their clients. “Interestingly, advisors are more conservative than investors when it comes to their expected retirement age, with only 21% expecting to retire before 63 and 43% expecting to work until the ages of 68 to 75,” the survey found.