One of the most important things advisors can do for clients is to help them pinpoint strategies to optimize retirement income. While guaranteed income products like annuities are one option, Social Security and the various claiming strategies associated with it shouldn’t be overlooked. Being a go-to advisor for Social Security insight can be a fruitful business strategy, here’s how to get your arms around it.

Key takeaways:

• Consumers are grossly misinformed about Social Security and desperate for help.
• Social Security experts and fintech make it easier for advisors and clients to weigh claiming strategies.
• Social Security seminars provide insight clients need, while boosting advisor credibility.
• As a form of guaranteed income, Social Security provides a pathway to increase annuity production.
• Stress testing retirement plans for Gen X can position advisors as holistic, solution providers.

Consumers are grossly misinformed about Social Security

It’s no secret that the future of Social Security is in peril if the government doesn’t take drastic steps to preserve it. Combine that with the ever-growing debt that is burdening our country and uncertainty around future tax legislation, and clients have reason to worry.

At the same time, far too many consumers don’t understand how Social Security works or how to optimize the benefits available to them.

According to the Social Security Office of Retirement and Disability Policy, a 2020 Ipsos survey on public knowledge about Social Security revealed that only 39 percent of respondents who had at least a college degree “knew that Social Security retirement benefits increase with the cost of living and only 62 percent knew that the program provides survivor benefits.”

This lack of knowledge serves up a huge opportunity to advisors who are proactive about educating clients and prospects about guaranteed income in retirement. Consumers are desperate to learn about Social Security, and advisors can be the heroes who fill the knowledge gap.

Social Security experts and fintech make it easier to weigh claiming strategies.

We know that many advisors believe their knowledge about Social Security isn’t as strong as it could be. So, what can you do to get up to speed and have the information clients need to make educated decisions about Social Security options, like claiming strategies and survivor benefits? Turn to an expert for help.

When Simplicity InsurMark Virtual CMO Jack Martin has questions about Social Security, the first person he calls is Mary Beth Franklin, CFP.® After decades of researching, writing and presenting on the topic, Franklin, who joined Martin on a recent episode of The Breakthrough Advisor podcast, is renowned in the financial services industry for her expertise in Social Security planning and strategies for optimizing retirement income. 

She encourages advisors to collaborate with experts who specialize in Social Security education because it’s critical to the financial futures of American citizens.

Says Franklin, “Social Security is still one of the few sources of guaranteed income for clients that will last the rest of their lives and is cost of living adjusted. I think it really is worth educating yourself as an advisor and your clients. And if you don’t feel comfortable with that, there are third-party services out there that can get you, your client and the Social Security expert on the phone to discuss and analyze their best Social Security claiming strategy. And if necessary, go ahead and file the paperwork for them.”

Many advisors are also turning to fintech to simplify the claiming strategy process. For example, Simplicity InsurMark has partnered with software providers to provide tech tools and the Social Security Plus app that enables advisors to help clients optimize claiming strategies.

TIP: Mary Beth Franklin provided some terrific insight on some key Social Security claiming strategies during the podcast (divorced individuals, widows/widowers, survivor benefits, when to delay receiving benefits and more). Check it out here.

Social Security seminars provide insight clients need, while boosting advisor credibility.

Franklin also encourages advisors to host seminars on Social Security, so clients and prospects have the opportunity to learn about their options and ask questions they need answers to. You could also invite a Social Security expert to co-host the seminar with you. For clients and prospects, these events come across as non-threatening, because they provide value without the sales pitch, which helps build trust.

“For financial advisors, Social Security and Medicare seminars for existing and prospective clients are so powerful because they’re strictly education. You are not selling anybody on any sort of financial product, and you’re answering some of their most important questions.

“The takeaway tends to be, well, that advisor was really helpful to have me think about what I should do about Social Security or perhaps Medicare. Maybe I should go in and talk to him or her about the rest of my retirement income plan,” Franklin says.

As a form of guaranteed income, Social Security provides a pathway to increase annuity production.

As noted above, educating clients and prospects about Social Security can help build trust but it also opens the door to discussions about other forms of guaranteed income.

As Franklin explains, “When you’re trying to talk to a client about the concept of annuity, they may hear that word and their head spins. ‘They’re expensive. They’re complicated. There’s lots of fees.’ But you say, ‘Wait a minute, Social Security is essentially an annuity. You will get a monthly check every month for the rest of your life, no matter how long you live. This is essentially an annuity.

“And people have warm, fuzzy feelings about Social Security because they have vested in it. They have paid for this benefit throughout their career in the form of FICA taxes, and they very much expect to have that benefit when they retire.”

Stress testing retirement plans for Gen X can position advisors as holistic, solution providers.

With the future of Social Security still unknown, Gen X clients and prospects have valid concerns that they won’t receive the same level of benefits their parents and grandparents did. This provides an opportunity for advisors to step in and stress test their retirement plans, look at all of the moving parts and weigh options to help clients prepare for the future.

“It really puts the advisor in the position of, let’s analyze the problem and let me as your advisor suggest various solutions, different paths we could take to make up for this potential shortfall. I think it’s a real solid argument for having guaranteed or predictable sources of income to at least cover fixed costs in retirement. And then you could use drawing down your investments for the wants as opposed to the needs. But really there is almost a mental switch that goes off when you retire that the idea of guaranteed income is really a very secure feeling,” Franklin says.

Want to expand your reach into the Millennials market? Learn how to serve Millennials and fuel business growth here.

Have questions about tools and resources to educate clients on Social Security?

As an Advisor Development Organization, Simplicity InsurMark helps financial professionals expand their reach, cultivate relationships with clients and close more business. To learn more about our proven Value Engineering Process and the coaching, education, fintech and other resources we can provide, schedule a discovery call today.

As an ADO – Advisor Development Organization™, Simplicity InsurMark provides solutions to meet the ever-evolving needs of financial professionals with a mission to protect and enhance the financial security of every home in America.