Advisors' biggest competition comes not from other advisors but rather from their own clients' human nature, which poses obstacles such as inertia, fear, overspending and undersaving, according to the results of a Principal Financial Group study released Monday.
Key findings in the Principal Financial Well Being Index show that for 80% of clients, their top financial dream is financial security in retirement, and for another 77%, the top dream is an overall sense of financial security. Good health, travel and living debt-free round out the top five financial dreams.
Yet advisors say that clients' top financial blunders include living beyond their means, at 24%, and not saving enough, at 15%. A total of 616 financial advisors participated in the nationwide survey, which was conducted online by Harris Interactive in the second quarter.
"Financial planning doesn't have to be so hard. The most effective advisors help clients envision their financial future," said Tim Minard, senior vice president of distribution at The Principal, in a statement. "They help clients reverse the financial lethargy that got them stuck in the first place. Even small actions can result in financial success over time, which is why it's critical to engage an advisor and start financial conversations early and often."
Advisors save clients from their worst instincts because they help both individuals and business owners develop plans to save for the long term, invest and grow their nest eggs, protect their assets and manage their income during retirement, Minard added.
Other key findings show that 65% percent of advisors say clients most often stretch the truth about living within their means, followed by 44% saying that clients fudge the facts on just how much debt they have.
