When asked to consider where retired or near-retirement clients see the most value from them (advisory services), responses included protecting portfolio principal (56%) and providing sufficient income (48%). However, less than a quarter of advisors agree that either of these is the most valuable service they provide.
Following up my last article Income Planning is not Just Investment Management, I read more evidence about the rift between what retirement planning clients want and what many advisors offer for services. As the above quote states, and from my own experience, many people are looking for security and a consistent retirement income cash flow more than they want supercharged portfolio growth (and its inherent risks).
Are Clients and Advisors on the Same Page?
But when these clients meet with advisors, and share their concerns about stock market risk, they are often told “not to worry” and to “stay the course” because the market has ups and downs; and these advisors are trying to “hold the clients hands” through the market turmoil and trying to help them “think clearly.” The problem is the clients are simply tired of this – and they’re not interested in watching their portfolio go up and down 30% at a time no matter how tightly their advisor is holding their hands. They just want to be more conservative!
Another challenge presented by the survey, besides the difference in risk perception, is that the approach to retirement income (as opposed to growing a portfolio) is “still developing” in the financial industry. Many advisors are just not equipped to assist clients with retirement income planning. It requires a different approach.
Therefore, it might make sense then, for clients interested in retirement income planning, to work with an advisor who specializes in the retirement income planning perspective and who has knowledge specifically in this area.
FYI: one industry group for advisors, investment firms, insurance companies and other specialists who focus on retirement income planning is the Retirement Income Industry Association – you can learn more about that organization here: RIIA
See the survey reported in MarketWatch here: Survey
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