Are advisors doing enough to allay client fears?
RetireOne recently conducted a joint survey with Midland National Life Insurance to better understand the landscape of retirement planning. You can check out the executive summary, but one of the key takeaways is that clients are concerned about outliving their retirement savings (82%) due to a wide variety of factors. Troublingly, it seems like advisors mostly (92%) feel like they have all the tools they need to handle client concerns.
The survey covers a number of other facets of retirement planning, such as whether or not advisors are using income planning software, how open they are to annuities, how they feel about recent legislative changes like the SECURE Act and the LIFE Act, and so on.
The survey has been making the rounds, too! 401(k) Specialist Magazine summarized the survey’s findings, and focused on the same concerns we outlined above:
A new survey released today finds that 82% of Registered Investment Advisors (RIAs) agree that clients are concerned about outliving their retirement savings, and 64% agree that clients worry about retiring on time. Despite this, the survey also suggests that many RIAs may not have a clear plan for protecting client portfolios as they approach retirement, and may be focusing more on accumulation than decumulation.
This sentiment was backed up by BenefitsPro, who highlighted advisors’ low adoption of income-planning software:
Even with all of these concerns, most advisors believe they have the tools necessary to address increasing client anxiety. Survey officials note, however, that only 4 in 10 respondents use income-planning software.
ThinkAdvisor focused on a different part of the survey: advisors’ growing acceptance of annuities as important financial planning tools. They included this quote from RetireOne CEO and co-founder David Stone:
On a day when the market drops 600 points, conversations with a client who has a portfolio with an income floor “are bound to be much easier than for an advisor who hasn’t protected their client’s spending in retirement,” Stone said. “The latter advisor is likely fielding panicked client phone calls trying to convince them to hold the course in equities rather than sell low.”
Rethinking65 had this to say about advisors becoming more open to annuities:
With rising interest rates and increased market volatility, however, more advisors are taking a closer look at annuities to generate income for clients. In RetireOne’s 2022 survey, 65% of advisors said they would refer annuities to their clients should their needs be addressed by the features of a specific offering. That compares to 52% last year.
Finally, Financial Advisor IQ included this quote about advisors’ continued reliance on the 4% rule:
“Despite inflation climbing toward 9 percent and the creator of the four percent rule calling for a revision to the commonly-referred-to rule of thumb, RIAs still rank unprotected methods for generating retirement income ahead of lifetime income solutions,” the companies write in the announcement.
As the landscape of retirement planning continues to evolve, and we continue to see all the ways in which the global economy continues to feel the aftershocks of war, a pandemic, supply chain disruptions, and more, it’s important to keep our ears to the ground so we can better understand both client fears and the obstacles facing advisors. For more information, check out the executive summary and the infographic.