Report Highlights Secrets Clients Hide from Their Advisors

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By Jason Bramwell

Are clients being forthright with their financial advisors about factors that could affect their personal finances? While most are, 28.6 percent said they've withheld critical financial information from their advisors, according to a new report from Securian Financial Group Inc.

"They may not realize it, but personal matters can profoundly affect a family's financial stability", Michelle Hall, manager of market research for Securian Financial Group, said in a written statement. "Health concerns (36.9 percent) and marital difficulties (31.1 percent) rank high among the critical subjects clients do not discuss with their advisors."

Richard Preuss Jr., a financial advisor with South Bend, Indiana–based The Healy Group Inc., said he isn't surprised by the 28.6 percent who withhold information; however, he doubts the percentage is that high among his clients, because he said his relationships are strong.

"You have to understand what's important and what's driving them", said Preuss, who has been a financial advisor for thirty-one years.

Of the 720 consumers who work with financial advisors surveyed for the report, Client Secrets: What People Don't Tell Their Financial Advisors, 25.7 percent said they carry debt their advisors don't know about.

A sizable portion of those who withhold financial information from their advisors appear – demographically at least – to fall in many advisors' target markets, such as:

  • Nearly one-third are pre-retirees and retirees; two-thirds are forty and older.
  • One-fifth are affluent, with $150,000 or more in annual household income, or mass affluent, with an income between $100,000 and $149,000.
  • Among those who are employed, two-thirds are in professional or managerial careers.

According to the report, 51.5 percent of those with secrets said the information is too personal to share with their advisors, while 44.7 percent reported their secrets are outside of their financial strategies and don't need to be shared. These responses may suggest a lack of education about the benefits of holistic planning and a need to raise awareness about the financial risks associated with not sharing these matters. One-fifth (20.4 percent) said their secrets are too embarrassing to reveal.

Joel Twedt of Twedt Financial Services Inc. in Lake Mills, Iowa, who has been a financial advisor for thirty-four years, said when clients withhold information that could affect their financial plans, he doesn't pry.

"Some people are embarrassed to provide information, so I don't ask. Once they get comfortable, it's amazing what they reveal", he said. "Quality advisors are counselors. It isn't just about the clients' money; it's about their dreams, their fears, their families."

Some people may hold back because they don't want to hear what their advisors would say if they had the full picture. When asked what changes their advisors likely would recommend, 28.9 percent of respondents said increase savings, while 25 percent said their advisors would want to create new financial plans.

"If [clients] keep secrets, they likely have duplication in their investment portfolios, are underinsured, or carry debt that eats away at their net worth", said Nicole Winter Tietel, a financial advisor at Winter & Associates Inc. in St. Paul, Minnesota. "Ultimately, they are taking more risk."

Nearly half (48 percent) of all respondents said trust is the most important aspect of their advisor relationships. Of the nearly 29 percent who withhold critical information, only 11 percent said it's because of a lack of trust.

Preuss said trust between the client and the financial advisor is a two-way street. "I make sure up front that they know I can only help them as much as they reveal to me", he said.



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