Advisors urged to “take a look at their book” to tackle advice gap
It appears advisors are failing their clients in the most crucial way possible – giving them advice.
More Americans are seeking help for financial tasks, often with financial professionals, although advice gaps still exist, according to a new market sizing report from consumer research firm Hearts & Wallet.
An advice gap, according to the firm, is defined as U.S. households that found a financial task very difficult and have not sought help in the past 12 months. At the national level, the biggest advice gaps in dollar terms nationally are estate planning, “handling market volatility emotionally,” Roth conversion, buy/sell specific securities, balancing goals and RMDs.
“I think the biggest thing [for advisors] is that they’re probably not covering all their customers very thoroughly,” said Laura Varas, CEO of Hearts & Wallets. “We’ve been doing a lot of what we call consistency testing and some very venerable firms that think they’re giving really deep and broad advice during a full-service model, one third of their customers say ‘I don’t get any advice and service’.”
Varas says the main takeaway here for advisors is “to just take a look at their book.”
“If they haven’t talked to someone in a while, pick up the phones, give them a call,” she said.
Among households at the national level, the biggest advice gaps are “choosing appropriate investments”, “figuring out how to fund my expenses” and “handling market volatility emotionally”, each nearly 24 million households, followed by “plan to balance my short- and long-term goals.”
The No. 1 most popular task for seeking help is “calculating and paying income tax” with 18 percent of households. Other tasks show much lower rates for seeking help. Meanwhile, for retirees in the
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