In a recent Charles Schwab study titled Independent Advisor Outlook Study, 63% of advisors say it will be difficult for investors to achieve their retirement goals. The study cited a partial list of problems that included: A historically high federal debt, high unemployment, and rapidly growing college and health-care costs.

Sitting in the background are additional causes for concern such as rising longevity, the demise of the defined benefit pension plan, and low saving rates compared to other developed countries. One of the biggest issues is the rise of defined contribution plans, such as 401k, that transfer investment performance risk to employees. Many current retirees enjoy the guaranteed benefits of a pension plan. Their children and grandchildren will not be so lucky.

Schwab thinks it is ironic that investors are more optimistic about achieving financial performance goals than their advisors. I don’t think it is ironic, I think it is tragic because millions of investors think they are ok when they are in big trouble. Why? Investors reflect what they are told by financial advisors who frequently exaggerate their ability to achieve financial goals to gain control of their assets. In fact, many investors who were surveyed by Schwab believe their advisors are going to bail them out. Guess who created that impression?

Schwab executives believe one outcome for advisors is a new role that requires them to help investors set more realistic investment performance goals for retirement assets. This outcome is skewed because Schwab only works with advisors who are registered (RIA, IAR) to provide financial advice and services for fees. Unfortunately, 75% of advisors are sales reps who are paid commissions to sell investment and insurance products. These sales reps were not in the Schwab survey.

To add to investor confusion, most commission reps tell investors they are financial advisors because it reduces sales resistance and helps them win new assets. This is an illegal claim, but reps get away with it because it is verbal and there is no written record. Consequently, millions of investors think they have advisors when sales reps are really investing their assets. Reps, masquerading as advisors, are not inclined to lower expectations because it could cost them sales and commissions. They have already misrepresented themselves to gain control of investor assets. Why would they tell the truth about expectations?

In fact, commission reps are notorious for creating high expectations that help them sell investment and insurance products. What do they care? They are paid within 30 days of the sale. Investors who were naïve enough to follow their advice may not run into trouble for 10 years. By then it is too late – they have high expectations and inadequate assets.

Now, more than ever, it will be critical that investors select real advisors who provide competent advice that has a realistic chance of happening. Make sure financial professionals are Registered Investment Advisors (RIAs) or Investment Advisor Representatives (IARs), are acknowledged fiduciaries, and are compensated with fees. These criteria eliminate the sales reps.