Our Survey Results: How Good are Advisors at Their Own Financial Planning?

Bob Veres

Do advisors have a financial plan for themselves – like the ones they prepare for their clients? Are they financially prepared to retire? Do they take the same degree of risk in their investments as they do for clients? My extensive survey revealed some surprising – and even disturbing – results. As a bonus, we now have hard data showing who advisors want as the next president.

I’ll discuss the key findings with regard to how advisors do their own planning, but first let’s look at the results of the presidential survey.

My survey of the members of the Advisor Perspectives and Inside Information communities received 1,165 responses from advisors across the country. The presidential poll was interesting, with all 13 candidates I listed receiving votes, although Rick Santorum (1 vote), Mike Huckabee (3), and Rand Paul (11) were all in the minority, perhaps because all of them suspended their campaigns shortly after the polling opened. The leading vote-getter, with 15.5% of the total votes, was Marco Rubio, followed by Hillary Clinton (12.9%) and, surprisingly, Michael Bloomberg (10.3%), who has not declared his candidacy.

Only 7.5% of the financial professionals who participated in our survey would choose Donald Trump to be U.S. president.

Not surprisingly, advisors with 1-5 years of experience were almost three times more likely to favor Bernie Sanders than those with 20+ years of experience, and this younger cohort was also 10 percentage points more likely to favor Hillary Clinton than their older counterparts. A reverse trend could be found with Marco Rubio, favored by just 13.7% of the advisors with fewest years in the business, but in the low 20s for all other age groups.

The third-most-popular category was “other,” and a number of advisors wrote me emails in a state of irritation wondering why John Kasich wasn’t included on the list. I was under the (as it turns out, false) impression that he’d dropped out of the race. This was before he finished second in the New Hampshire primary.

So sue me. (Actually, I’d rather you didn’t.)

Who do planners use for their own finances?

Poll respondents were predominately fee-only state-registered or SEC-registered advisors (36.3%) or dually-registered practitioners (31.2%), giving us a broad spectrum of the financial services profession. The group also tended to be experienced, with 40.5% having more than 20 years in the business, and another 23.8% with 11-20 years of experience.

My primary area of questioning could be interpreted as trying to find out whether advisors are like the cobbler’s children – who, the old saying goes, tend to walk around barefoot while the cobbler takes care of the paying customers. One presumes that everybody who filled out the survey believes in the value of professional financial advice, but are they, themselves, willing to buy for themselves the services they provide for their clients?

In my introduction to the survey, I noted some of the benefits of hiring a financial planner: you have an outside professional focusing on your financial situation, rather than the afterthought that you might give to your own circumstances. Your spouse gets a chance to receive the perspective of an outside professional and participate in your financial planning process. As a professional advisor, you get the valuable opportunity to experience what it feels like to be on the other side of the desk – which gives you perspective on how your own clients feel when they’re financially undressing in those first meetings, and answering difficult questions about their goals and objectives.

Finally, you experience first-hand the service model of an advisor whose work you respected enough to hire. This can give you ideas on how to improve the service you deliver to your own clients. That, alone, might be worth whatever you pay for financial planning.

Unfortunately, more than half of our respondents – 54.5% – are not availing themselves of these benefits; they answered “no” when we asked whether they work with a financial planner. And only 44.9% told us that they, themselves have a financial plan.

A total of 19% of the survey respondents receive financial planning services from another advisor at their firm, which would give them two of the four benefits listed above. Only 4.3% are working with an outside planner at another firm – and getting all four benefits listed in my introductory remarks.

When I took a deeper look at the data, I found that slightly more advisors with 20+ years of experience (27.2%) are getting planning help from their own firms than advisors in other age brackets (20.5% for 11-20 year tenured professionals; 22.2% for those with 6-10 years of experience and 24.1% for those with 1-5 years in the business). Advisors with 6-10 years of experience were twice as likely as the other age cohorts to work with an advisor at another firm – 11.1% vs. 4.3% to 5.5% of the other groups. But the overall percentage was low across all categories. “No” was the dominant answer across every age group.

The obvious implication is that planners hiring planners from outside their firm is an extremely rare phenomenon. Very few planners are buying the same services that they provide.

This is extraordinary.

I suspect if a poll were taken of attorneys or doctors about the services they respectively provide, the percentage would be much higher, perhaps close to 100%.