No Meeting of the Minds Between Financial Advisors and Consumers

Financial advisors and consumers are not on the same page when it comes to spending, saving, budgeting and managing money, according to collaborative research from Washington, D.C.-based Certified Financial Planner Board of Standards Inc. and Heart+Mind Strategies Advisors, based in Reston, Va.

“Just like a doctor needs to know a person’s symptoms before making a diagnosis, so does a financial advisor need to know what a consumer is spending and saving before developing a comprehensive financial plan,” said Kevin R. Keller, CFP board CEO. “While there may be some hesitation by consumers to ask for help, if financial advisors don’t proactively engage them on budgeting and cash flow needs, they are missing a clear opportunity to help their clients take control of their financial futures.”

The findings reveal a significant disconnect between advisors and consumers when it comes to the perception that saving and managing money is easy. Nearly eight-in-ten consumers (78 percent) believe it is easy to save money, but only 39 percent of advisors agree. At the same time, most consumers (88 percent) believe it is easy to manage money, yet only 30 percent of advisors agree.

Nearly half of advisors (48 percent) agree that clients with a mismatch between spending and their overall goals would benefit most from cash flow management, followed by clients who have a low awareness of their spending (22 percent), clients that need to see the impact of saving more or spending less on future goals (21 percent) or clients with little emergency savings (8 percent).

Advisors find the benefits of cash flow management and budgeting to be significant, with 96 percent agreeing that clients become more confident and secure about their financial futures, but developing a budget and performing cash flow exercises can be a challenge. Clients often withhold data, provide inaccurate information or are unwilling to adjust habits. Still, advisors continue to see it as a critical component to successful financial planning — three-quarters of firms provide some form of cash flow management, and more than half (53 percent) include it in a client plan all or most of the time.

“Understanding earnings and expenses are core to financial wellness at every income level. Even though budgeting can be a time-consuming process, it’s well worth it,” said Keller. “Certified Financial Planner professionals are uniquely qualified to provide clients with a tangible idea of what to expect from their finances, ensure they have a better understanding of how to effectively manage spending and empower them to feel confident and secure about their financial situations today and in the future.”

The online survey was conducted from Oct. 25-Nov. 2, 2018 among 133 full-time financial advisors and a national sample of 300 adults between the ages of 35 and 65 years of age, who were the primary or shared decision maker for personal finances and have investable assets of $100K+.

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