nor have we had any utilize a reverse mortgage . Both of those options have long-term implications .”
A home equity line of credit ( Heloc ) is an option . “ Most Helocs can be obtained at little or no cost and they don ’ t increase your modified adjusted gross income . Another is to ‘ bunch ’ your income / cash flow from your traditional irA or 401 ( k ) into one year so that future years ’ MAgi is lower ,” Primeau says . “ The client pays a higher rate for one year but lower rates the next one to two years .”
Affected clients often appeal an irMAA , which is filed with form ssA-44 , “ Medicare income-related Monthly Adjustment Amount — life-changing event .” legitimate life-changing events include marriage or divorce , bankruptcy , the death of a spouse , one spouse stopping work or having hours reduced , or the loss of an income-producing property to a disaster .
“ i keep reminding them the gain from the sale of a home or a capital gain from the sale of securities is not going to win an appeal ,” Pon says .
— Jeff Stimpson
Nearly 90 % Of Robo-Advised Clients Would Switch To Humans , Vanguard Says
Investors ’ loyalty to human advisors is not only enduring , it trumps any allegiance to digital advice , a vanguard survey of 1,500 investors with at least $ 100,000 in investable assets found . in fact , more than 90 % of human-advised clients say they would not consider switching to a digital advisor , while 88 % of robo-advised clients would consider switching to a human advisor in the future , according to the survey .
After numerous headlines about the threat that robo-advisors pose , the report should be gratifying to advisors . in fact , digital investors may be a goldmine of potential new clients for them , according to vanguard .
“ robo-advised clients could represent an untapped and under-targeted market to convert to human advisors , especially as their needs become more complex ,” said the survey ’ s authors , vanguard behavioral economist Paulo costa and Jane Henshaw , head of the company ’ s digital research .
The financial gain for investors using human advisors is also immense , they said . “ investors using human advisors estimate being $ 160,000 closer to achieving their financial goals . Three times as many investors report having strong peace of mind when working with a human advisor as compared to going it alone ,” costa and Henshaw said .
While some advisors have worried that technology and the significant uptick in dig- ital advice offerings may cannibalize their client base , that hasn ’ t happened , vanguard found . in fact , 93 % of investors who already use a human advisor reported they would choose a service that includes a human advisor in the future .
While the authors said they were concerned about confirmation bias — with investors validating the choice they had already made — robo-advised investors did not show the same loyalty .
“ When we asked current robo-advised clients about their future preference , we find that the same loyalty does not hold : 88 % say they would be willing or extremely willing to work with a human advisor in the future ,” costa and Henshaw said .
The perceived value of human advice is ranked higher by investors and should not be underestimated , vanguard found .
“ regardless of the method of delivery , investors believe advice provides higher incremental portfolio value than going it alone . The perceived value-add to annual performance was 5 % for human advice and 3 % for digital-only advice ,” the authors said .
Advisors should take note , however , that digital advice also serves very specific purposes for investors who use it , vanguard said . The study found that investors who use digital advice prefer it for certain portfolio management services such as diversification and tax optimization .
“ Across the board , clients suggest that human advisors should consider automating their portfolio management services , leveraging technology to scale their business while strengthening their uniquely human value ,” costa and Henshaw wrote .
— Tracey Longo
“ Investors using human advisors estimate being $ 160,000 closer to achieving their financial goals ,” Costa and Henshaw said .
MAY 2022 | finAnciAl Advisor MAgAzine | 13