Sometimes, things have to get worse before they get better.

There may not be a better example of that bitterly hopeful cliche than the fate of Social Security, whose trust funds are accelerating toward depletion without any government intervention in sight. Last week, the program’s annual report showed the combined trust funds — Old-Age Survivors Insurance (OASI) and Disability Insurance — running dry by 2034, a year earlier than previously projected. On its own, OASI is on track to be exhausted by 2033, at which point it could pay out 77% of benefits, figures unchanged from last year’s report. The numbers show how important it is for advisors to guide nervous clients through Social Security claiming strategies so that they can optimize their benefits.

Already in 2025, the rate of early first-time claims is up, thanks in part to attention the Social Security Administration got from Elon Musk’s Department of Government Efficiency. People were worried about the future of the program and the level of customer service it would be able to provide, leading some to start claiming benefits earlier than they might otherwise have, said Mary Beth Franklin, an independent Social Security specialist. Agency data in April showed a spike in the highest 10% of earners claiming at 62 (the earliest age for eligibility, when they qualify for as little as 70% of full benefits) rather than 67, when full benefits are available.

“That’s a shame, because that’s cutting their benefits for the rest of their lives,” Franklin said.

An Exhausted System

This year, Congress enacted the Social Security Fairness Act, which made millions of public workers and their spouses eligible for benefits, resulting in more money being pulled from the trusts. The coming shortfall of the system “isn’t a distant concern; it’s a rapidly approaching reality that will affect today’s workers and retirees,” The Senior Citizens League stated in a reaction to the administration’s report last week. That group urged Congress to address the shortfall by passing phased-in reforms rather than waiting until the last minute, at which point the government might have to pull money from the General Fund to cover full benefit payments.

People also need help with planning their Social Security claims, data from Hearts & Wallets show:

• Nearly two-thirds, 64%, of people of all ages don’t know when they will retire.
• Even more, 68%, said they are concerned about the future of Social Security.

Social Insecurity. A common reason people have been claiming Social Security early is mistakenly thinking they will be grandfathered into the system and protected from benefits reductions in the future, Franklin said. “Anyone who needs the money — go ahead and claim it. That’s what it’s there for,” she said. “The idea of claiming benefits early out of fear is like selling your stocks in a down market. It’s locking in losses.”

Study up, advisors: AI may be on the exam.

The CFP Board, the financial services industry’s main certification body, convened an AI working group earlier this month to determine how to wrap industry applications of the tech into its extensive certification course. The move is the board’s latest effort to address AI’s impact on the world of financial advice; earlier this year, it released a preliminary set of guidelines addressing client privacy protection and compliance concerns.

As AI’s adoption grows with the improvement of applications like ChatGPT, more and more AI companies targeting financial professionals are sprouting up, promising to speed up processes and simplify workflows. Advisors are also increasingly using AI to communicate with clients and produce marketing materials; regulatory bodies, therefore, are in a sprint to keep up, experts said.

“We want to make sure, as this evolves, that we’re riding the wave of what’s happening, but also charting our own course,” said Dane Snowden, the CFP Board’s COO and leader of the working group. “We have formed this AI working group to help us with that.”

All AI-Board

The CFP Board’s working group comprises 14 people — “big thinkers,” said Snowden — with expertise in the AI arena. The group will figure out what should be added to the nonprofit’s exams in its annual practice analysis process. While AI is currently being used by advisors primarily for back-office functions, like notetaking and notarization, Snowden sees its use expanding to client-facing work in the future.

Advisors are also warming up to the idea of AI assistance:

• Only 8% of advisors see AI as a threat to their livelihoods, down from 21% a year ago, according to a recent survey from the Family Wealth Report.
• 76% of advisors say they’ve “reaped immediate rewards” from using AI in their practices, per Advisor360 data.

The top priority for regulatory and certification bodies should be ensuring someone is always there to verify AI output, said Era Jain, the founder of Zeplyn, an AI notetaker for advisors. Jain said more educational materials are needed for advisors to increase awareness of AI’s use cases, but that the CFP Board’s move is a step in the right direction. “There isn’t enough material right now that exists that’s purely talking about how you can start leveraging [AI] in your practice in an educational way,” she said, “and that’s the gap that I think this AI working group can largely address.”

AI(WI). The Investments and Wealth Institute, another nonprofit offering its own certifications for advisors, also has a task force looking at how it can use AI to speed up operations. Its CEO, Sean Walters, says the main challenge for regulators is ensuring there’s always a human involved in the process.

“If, and that’s a big if, AI were ever used to expedite asset allocation or rebalance a portfolio, a human is still needed in between that and the client,” he said. “Our philosophy on it is, at least internally, ‘AI-forward, human-first.’”

Put that in the record books.

Not everyone has an advisor, but most Americans have some type of retirement account, meaning the majority of folks are planning for retirement without the help of an advisor. That gap creates an opportunity for recordkeepers to step in and play a larger role as planners, according to a new Cerulli report. It’s a strategy that may create more competition for traditional financial advisors.

“There is a lack of financial education in America, and it is critical for employers to let their employees know recordkeepers have financial advisors who are ready to meet with them,” said Evan Potash, executive advisor at TIAA.

Need a Little Help

The problem is that 401(k) participants often find retirement planning confusing and challenging, and less than a third are confident in their ability to make future financial decisions, per the Cerulli report. In fact, some 63% of 401(k) investors — many of whom fall into the mass-affluent category — do not work with an advisor. The research also found:

• More than half of mass-affluent 401(k) participants end up relying on their recordkeeper as their primary source of financial advice.
• In many instances, these are point-in-time services, meaning the participant gets advice for a specific situation, rather than ongoing financial planning.

“Recordkeepers can share the burden by taking on younger and less wealthy participants who may have less complicated planning needs,” said Elizabeth Chiffer, Cerulli analyst. Meanwhile, advisors can focus on providing a wider array of services to wealthier clients, she added.

Roll Over. Now Stay. However, recordkeepers that build solid relationships with 401(k) participants during the wealth accumulation phase are better positioned to secure IRA rollovers when participants leave their jobs and move money out of their retirement accounts, Chiffer told Advisor Upside. More than 60% of active 401(k) participants who move money out of their account do so within a year of leaving their job, the report found.

Many 401(k) participants are simply unaware of recordkeepers’ advice options, she said, adding that they often require participants to seek them out or enter into a managed account. “We are encouraging recordkeepers to lower any barriers to accessing in-plan advice.”

Close to Home. While that might sound like competition for traditional financial advisors, some advisors don’t view recordkeepers as the biggest threat. “Most 401(k) plan sponsors want an advisor that is local to their community,” said Paul Penke, a CFP with Ironvine Capital Partners. “The hands-on presence that a local advisor provides is difficult to replicate.”