Advisers need new planning tools to help growing self-employed workforce

While the so-called “gig economy” receives the bulk of media attention, Uber drivers and Task Rabbit laborers remain a fraction of the 20 million full-time self-employed people working in the U.S.

It’s these contractors, real estate agents and even financial advisers running solo practices, who represent a significant opportunity for financial advisers, according to Kim Langway, Fidelity Labs vice president of product management, speaking on Thursday at a Fidelity “Inside Track” event for financial advisers.

The fastest growing segment of self-employed workers are older (60 and up) with enough experience and specialized knowledge to go out on their own, she said. This movement of “soloists” — Ms. Langway’s preferred nomenclature over gig workers — is not slowing down, and they could be a huge opportunity for advisers.

[More: The gig economy is a subject advisers must know and understand]

“Eighty percent of those who made the leap say they are never going back to full-time salaried employment,” Ms. Langway said. “They seek consumer financial advice in every form, more than those in salaried employment.”

But serving this group requires a large mental shift for many financial advisers. Finding work and collecting payment can be unpredictable for even the most successful soloists, and many prefer to keep assets in easily accessible cash accounts rather than in tax-advantaged investment accounts, she said.

Soloists may be prime candidates for financial planning, but professionals will not be successful using the same methods advisers have traditionally deployed.

“Gone are the days when planners could model a steady salary growth rate. The industry needs to adapt to this new reality,” she added.

One way advisers can provide value to soloists is by focusing in on important life milestones. For example, financial advisers can help self-employed clients prove their income when applying for a mortgage.

[More: Ladenburg bets advisers will serve more self-employed clients in the future]

Ms. Langway also recommended advisers study up on the key pain points for self-employed workers: taxes and healthcare costs. For older clients thinking of going solo, advisers also can help with the process of leaving a W2 job.

“Instead of chasing assets, advisers should really help people to create a plan to use self-employment as part of a bridge strategy” to retirement, she said.

However, advisers also can help self-employed clients increase wealth. By acting as business coaches, advisers can ensure soloists are investing in their businesses.

[More: As Uber sets sights on fintech, it could bring retirement saving and advice to the gig economy]

“Advisers really need to approach this segment from both a personal and business perspective,” Ms. Langway said.

Google has more contractors who work for it than full-time employees, and the demographic includes real estate agents and even financial advisers running a solo practice.

Related Topics: Fidelity Investments