Policy changes scare clients — but they won't tell advisors

<p>Many clients worry that future policy changes could weaken their retirement plans. But those concerns are not always making their way into conversations with financial advisors.</p>
<p>That disconnect could leave clients anxious about political and economic headlines without fully understanding how those developments actually affect their financial plans, according to new research from Jackson Financial conducted with the Center for Retirement Research.</p>
<p>The study surveyed over 1,400 investors ages 45 to 79 with at least $100,000 in financial assets, along with 400 financial professionals. It found significant differences in how the two groups view the economy, government policy and the risks those factors pose to retirement planning.</p>
<p>Nearly half of investors, 47%, believe current government policies will weaken their retirement security. By comparison, about one-third of financial professionals — representing broker-dealers, RIAs, insurance companies, banks and wirehouses — expect those policies to weaken retirement outcomes.</p>
<p>At the same time, investors tend to view the broader economic environment more pessimistically. Just 32% of investors say they are optimistic about the long-term strength of the U.S. economy, compared with 62% of financial professionals.</p>
<p>Those differences can shape client conversations, and sometimes prevent them from happening at all.</p>
<p>The research found investors are widely anticipating changes to government programs that play a key role in retirement.</p>
<p>Sixty-eight percent of investors expect Medicare premiums or co-pays to rise in the next five years, while 65% anticipate cuts to Medicaid benefits. Nearly half, 46%, believe Social Security benefits will be reduced.</p>
<p>Tax concerns are also widespread. More than half of investors are worried that their state will need to increase taxes over the coming years. They're also less optimistic than financial professionals concerning the likelihood of federal tax deductions over the next five years.</p>
<p>Those worries appear to be affecting behavior. The report found that 21% of pre-retired investors have delayed retirement since the start of 2025, a change researchers say may be influenced by policy uncertainty.</p>
<p>Despite those concerns, policy discussions remain uneven in advisor-client meetings.</p>
<p>Among investors who work with financial professionals, topics like Social Security are common points of discussion. But issues like Medicare and long-term care often go unaddressed.</p>
<p>Researchers say part of the gap may stem from advisors' hesitations to raise policy issues.</p>
<p>Some financial professionals say they avoid the topics because clients may perceive them as political. In the survey, only 12% of professionals said they actively like discussing policy issues with clients, while 7% said they prefer to avoid those conversations altogether.</p>
<p>Yet many advisors say these discussions are essential to planning.</p>
<p>Joon Um, a tax advisor and CFP at Secure Tax &amp; Accounting in Beverly Hills, California, said policy uncertainty regularly comes up in planning meetings.</p>
<p>"This definitely comes up with clients, but most of the time we bring it up rather than waiting for them to ask," Um said.</p>
<p>"The key with policy uncertainty is not overreacting," Um added. "Laws change over time, so we focus on building flexible plans; things like diversified savings, tax diversification between accounts and keeping some liquidity."</p>
<p>Um said he also tries to keep the conversation focused on planning rather than politics.</p>
<p>"The goal isn't debating policy; it's helping clients understand possible scenarios and making sure their plan can handle different outcomes," he said.</p>
<p>Starting policy discussions doesn't have to be complicated. Some advisors say the challenge is simply creating space for broader concerns.</p>
<p>Mitchell Kraus, co-founder of Capital Intelligence Associates in Santa Monica, California, starts many meetings with a simple question designed to surface client worries.</p>
<p>"I try to start most meetings with 'What feels heavy these days?' (or some version of that). It gets the conversation started," Kraus said.</p>
<p>That approach can open the door to discussions about taxes, healthcare costs or government programs that might otherwise remain unspoken.</p>
<p>Turning policy concerns into planning</p>
<p>Advisors say one of the most effective ways to address policy anxiety is through scenario planning.</p>
<p>Nicole Sullivan, director of financial planning at Prism Planning Partners in Libertyville, Illinois, said stress-testing long-term plans can help clients understand how policy changes might affect their retirement outlooks.</p>
<p>"Stress-testing and conservative assumptions are important when creating multidecade financial plans, as they help alleviate client concerns about potential policy changes," Sullivan said.</p>
<p>Her firm works with clients to identify the minimum income needed to cover essential expenses and evaluate how a plan might need to change if adverse scenarios occur.</p>
<p>The study's authors say those types of "what-if" exercises can help translate abstract policy risks into practical planning decisions.</p>
<p>One of the report's most notable findings is that investors working with financial professionals have almost identical views about the economy and policy risk as those who do not seek professional guidance.</p>
<p>For advisors, that suggests policy concerns remain largely unresolved even when clients receive professional advice.</p>
<p>In many cases, the researchers note, investors are already aware of potential policy risks. What they may lack is a clear understanding of how those risks translate into their own financial plans.</p>
<p>For advisors, bridging that gap could mean turning policy headlines into something far more useful: practical planning conversations.</p>