The gap between consumers' attitudes - and advisors' perceptions of those attitudes - about disabilities and their potential threat to their financial security.
The findings highlighted in this report suggest that there's significant opportunity for all financial advisors to better educate consumers about the risk of income loss from illnesses or accidents, and to better prepare them to mitigate this loss. Consider these steps to help consumers realize the devastating consequences of a disability - and enhance their financial preparedness.Address the need for income protection at younger ages.
Remember that nearly 70% of consumers thought it was important for people to start planning for a loss of income either at any age or in their 20s! Again, this interest may be heightened by recent economic conditions, but it's important that advisors not project "yesterday's" views on "today's" consumers. There seems to be a real opportunity for advisors to engage even younger consumers in conversation about how they'd maintain financial independence even if an illness or injury prevents them from earning an income.
Make it personal.
Experts who study risk say when a risk is personified - when the victim is a real person - consumers perceive the risk is more likely to occur. Our study confirmed that consumers who knew someone who had become disabled also recognized their own chances as higher. Sharing real life stories about disability - and the consequences - may be the best way to connect with consumers about the risk of disability and the importance of income protection planning.
Review existing benefits.
Our findings showed that consumers generally have a poor understanding of their benefit programs and may incorrectly think inadequate sources such as vacation or sick pay will get them through an extended period without income. Spending time reviewing what income protection plans are in place, how each one works and the maximum benefit they're entitled to receive from each one is an important step. Determine their sources of post-disability income, and whether they will be sufficient to meet their financial obligations in the event that a disability forces them to stop working for a time.
Although the survey showed that workers claim "disability can happen to anyone at any time," far too many haven't taken any steps to prepare themselves financially. Take responsibility for preparing consumers to take charge of their own health - both physical and financial. Once a disability occurs, it is often too late.
Make income protection the foundation of financial planning.
This study shows that consumers and financial advisors are in solid agreement that the ability to earn an income is an individual's most valuable financial resource. All financial independence - the ability to pay bills, maintain a lifestyle and save for the future - flows from income. Since income is indispensable, so is a carefully thought-out plan to replace that income in the event of loss.