Fourth Annual Advisor Authority Study Reveals Vast Majority of RIAs and Fee-Based Advisors Expect Tax Reform to Benefit Clients--and Are Taking Proactive Measures to Address Clients' Concerns
Louisville, KY – March 13, 2018 – In the wake of the recent passage of the most dramatic tax reform package in nearly three decades, 8 in 10 Registered Investment Advisors (RIAs) and fee-based advisors (79%), say the majority of their clients will benefit from tax reform—but just over half (56%) of investors say they will benefit from tax reform. These are among the latest findings from the fourth annual Advisor Authority study commissioned by Jefferson National, now operating as Nationwide’s advisory solutions business. In addition, advisors are aware of clients’ ongoing concerns about taxes, and they are taking proactive measures on behalf of their clients to ensure their success, according to this latest survey of more than 1,700 financial advisors and individual investors nationwide conducted online by The Harris Poll.
“The Tax Reform and Jobs Act is anticipated to have winners and losers across the financial services landscape. Our research shows that despite advisor optimism, investors are less confident, so RIAs and fee-based advisors are taking action to clear up the complexity and develop proactive strategies for clients at every level, from the ultra-high net worth to the mass affluent,” said Craig Hawley, Head of Nationwide’s advisory solutions business. “For a fourth consecutive year, our Advisor Authority study again shows how RIAs and fee-based advisors continue to prioritize clients’ concerns, by focusing on holistic planning, serving their clients’ best interests and proactively protecting their clients’ portfolios so they can stay the course and build more wealth.”
When it comes to the newly passed tax reforms, RIAs and fee-based advisors are already taking proactive action on behalf of their clients, with 8 in 10 (79%) saying they are adapting their approach to tax-advantaged investing in response. RIAs and fee-based advisors recognize their clients’ ongoing anxieties about taxes, which continue to be complex and can be one of the biggest investment expenses a client will pay, when federal and state taxes are combined. This year advisors rate taxes among clients’ top three financial concerns over the next 12 months and among the top three macro factors most adversely impacting client’s portfolios over the next 12 months.
As tax season approaches, investors say that they remain apprehensive—and despite advisor optimism in tax reform’s benefits, investors are less confident. Year-over-year, taxes continue to be among investor’s top concerns. When asked to identify their biggest financial concern over the next 12 months, investors rated taxes second, tied with protecting assets. When asked what macro issue would most adversely impact their portfolio over the next 12 months, investors this year rated taxes number-one, tied with global instability.
Yet, despite their ongoing concerns over the impact of taxes, and a relative lack of confidence over the benefits of tax reform, little more than one-quarter (28%) of investors say tax reform would increase their likelihood of working with an advisor in the next 12 months. This represents a unique opportunity for advisors to educate their own clients and prospective clients about the benefits of a holistic approach to financial planning that includes a focus on taxes.
In turn, 6 in 10 RIAs and fee-based advisors (60%) say that tax reform will provide them with the opportunity to expand their services and generate more business related to tax planning. Just as the vast majority of RIAs and fee-based advisors are optimistic that their clients will benefit from tax reform, more than three-fourths of advisors (77%) also believe that they will benefit.
The fourth annual Advisor Authority study explores the investing and advising issues confronting RIAs, fee-based advisors and investors—and the innovative techniques that they need to succeed in today’s complex market. It features a special focus on the most successful advisors and the most affluent investors. These initial findings are to be followed by a series of ongoing reports that will be released from May through year-end 2018.
About Advisor Authority: Methodology
The fourth annual Advisory Authority Survey was conducted online within the United States by The Harris Poll on behalf of Jefferson National, operating as Nationwide’s advisory solutions business, from January 3 – February 21, 2018 among 972 financial advisors and 827 investors, ages 18+. Among the 972 financial advisors, there were 508 Registered Investment Advisors and 464 Broker/Dealers. Among the 827 investors, there were 208 Mass Affluent, 206 Emerging High Net Worth, 206 High Net Worth and 208 Ultra High Net Worth. Results of this new research are compared to results from a similar 2017 and 2016 study conducted online by The Harris Poll on behalf of Jefferson National. Detailed methodologies from these studies are available upon request.
Investors are weighted where necessary by age by gender, race/ethnicity, region, region, education, income, marital status, household size, investable assets and propensity to be online to bring them in line with their actual proportions in the population.