A new survey conducted by the CFP Board reveals widespread affordability concerns among American households across income levels, with financial advisors reporting significant shifts in client behavior and financial outlook.
The survey of 440 certified financial planner professionals was conducted between July 9 and 27, with a margin of error of plus or minus 4.7%. While 68% of advisors indicated their clients maintain a positive overall financial outlook, 69% reported increased affordability concerns over the past 12 months. These concerns span both immediate expenses, cited by 53% of respondents, and long-term financial goals, mentioned by 60%.
Concern about the viability of major federal programs stands out prominently in the findings. Seventy-eight percent of advisors said their clients worry about Social Security’s long-term sustainability, while 73% reported similar concerns regarding Medicare. Both programs face trust fund depletion scenarios within the coming decade that would necessitate either benefit reductions or tax changes unless legislative action occurs. Beyond these safety net programs, clients expressed significant anxiety about healthcare costs (88%), retirement planning (88%), taxes (84%), energy prices (56%), and interest rates (55%).
The affordability pressures have prompted some clients to make potentially counterproductive financial decisions. According to advisors, approximately half of clients have taken or considered actions that could jeopardize retirement security, including early retirement account withdrawals (29%), reduced or eliminated retirement contributions (20%), and increased high-interest debt (18%). Most advisors, 85%, have responded by recommending strategies focused on preserving long-term financial objectives, such as stress testing plans for recession scenarios, establishing emergency funds, and accelerating debt reduction.
Interestingly, the survey found that upcoming elections appear to have limited direct influence on client financial decisions, with just 29% of clients having made election-related financial moves. Most advisors do not anticipate major electoral impacts on client financial health. Nevertheless, approximately two-thirds of advisors expect to revise client financial plans over the coming year, largely driven by shifting affordability considerations.
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