Show, Don't Tell: How to Boost Advisor Confidence Around Complex Topics

Can Pictures Help?

To better illustrate how visual aids can help simplify complex information, let's discuss an estate planning strategy that has risen in popularity given the current high interest rate environment and potential reduction of federal gift and estate tax exemptions subject to tax laws sunsetting in 2026. 

For high-net-worth and charitably inclined individuals, the use of a charitable remainder annuity trust has become appealing. The trust can be funded and set up to provide an immediate income benefit for either the donor or beneficiaries of the donor over either a set period of time or the lifetime of the beneficiaries, and the trust will pass through the remainder assets to a qualifying charity at the end of the trust term. 

There are moving pieces involved for which a visual example can be used to better connect them to form a complete picture, such as:

• How much of a charitable deduction the donor would potentially be entitled to claim for the transfer made to the trust ($192,776 based on a gift of $500,000 made to a 15-year trust using the April 2024 Section 7520 interest rate of 5.2%)
• How much the donor or income beneficiaries would expect to receive on an annual basis ($30,000 annuity payments based on a 6% payment rate and a $500,000 gift)
• How investing assets prudently within the trust might result in an even greater amount than was originally gifted being transferred to a qualifying charity to help satisfy the client's future philanthropic needs ($771,521 being transferred to a qualifying charity in 2039 assuming an 8% rate of return). 

The Impact of Visuals on Confidence

In the original surveys, we provide context on a given tax or estate planning strategy to gauge how the financial professionals' confidence on the respective topic changes after being guided with visual elements.

Even excluding those who indicated they were confident or very confident — because the use of visual aids is unlikely to affect confidence levels as their perceived or actual need for these tools would be low — we can see an improvement in confidence, especially among financial professionals who were not confident, as well those who were only somewhat confident.

Conclusions

The use of practical examples of planning scenarios is nothing new — most textbooks and news articles are filled with them — but they are delivered primarily through the written word. Given that many people have a preference for visual learning, and are able to better recall information that was consumed visually over longer periods of time, it is not surprising that the use of visuals can increase confidence levels among financial professionals as well.

If the use of visual aids can increase confidence in the knowledge of a particular planning concept, advisors might be more likely to bring up said strategy in response to a prospect inquiry. They might even be more proactive in their advice delivery and seek opportunities to create educational moments that will resonate with the clients they serve.

David Blanchett, pictured at left, is managing director and head of retirement research for PGIM DC Solutions, the global investment management business of Prudential Financial Inc. Ross Riskin is the chief learning officer at Investments & Wealth Institute.