Retirement Planning
One of the most sought after financial services clients seek out from advisors is retirement planning. This service is popular among both older and younger consumers, according to a survey by the Granum Center for Financial Security.
What consumers really want is retirement income planners. Those they can fully trust and rely on. Day traders need not apply.
According to a survey by the Granum Center for Financial Security, retirement planning was the most in demand service for both older and younger consumers (71%), and was equally popular among men and women. Meanwhile, 3 out of 10 consumers (31.3%) chose “understanding how much I can safely spend in retirement” as the top service they want from a financial advisor.
The study also showed that 27.1% of consumers listed “knowledge” as the attribute that’s most important to them when they’re picking a financial advisor, and half (49.2%) cited knowledge as one of the top three characteristics.
A Learning Process
Looking at this data, we can see a clear need for further education and specialized knowledge in retirement income planning, it is what consumers want, and it is what advisors in the RIA community think is valuable.
Financial advisors seem to be getting the message that their clients expect them to know how to prepare them for retirement. Thus, retirement income planning is the area independent advisors most want to grow in advanced expertise, followed by issues facing a similar clientele like estate planning and advanced tax planning.
Concerning more advanced knowledge or specialization, nearly three in five (58.5%) independent advisors at RIAs strongly agree that expertise obtained by pursuing a financial services designation has helped advance their career. And professional designation programs (66.6%) are among the most preferred education formats for applied specialized knowledge.
Most advisors agree that continuous learning is critical to the growth and success of their business, the value being more linked to integrated planning services than active security selection.
The Main Concerns about Retirement
As RIAs stream back into the classroom to study advanced retirement planning skills, the math problem confronting their clients grows simpler: they need more money to retire.
According to the Schroders 2022 U.S. Retirement Survey, working Americans say on average it will take $1.1 million in savings to retire comfortably. However, 56% of those surveyed say they expect to have less than $500,000 saved, including 36% who expect to have less than $250,000. Only about one-quarter (24%) expect to reach the $1 million mark, according to the study.
Last year, the percentage of working Americans nearing retirement age (60-67 years old) who said they have enough money to retire was 26%. As a result of spiking inflation, that number has declined to just 22% this year, according to the study.
“These are seriously challenging times, and they seem to be taking a toll on the American worker and their belief about achieving a comfortable retirement,” Joel Schiffman, head of intermediary distribution for North America at Schroders, said in a statement. “This year, inflation is the number one concern Americans have about their retirement, and next year, it may be something else.”
One thing that might help those workers feel better is having a plan for how to achieve their retirement goals. The Schroders survey found that less than a quarter of respondents (23%) had a written retirement plan to guide their decisions, while 40% said they had done some planning but didn’t have a formal plan, and 37% have not done any planning.
Among those without a plan, 76% say the idea of planning is overwhelming while 56% say it doesn’t make sense given that life is so uncertain.
“Given the relatively small percentage of Americans who have taken the time to create a specific plan for generating enough assets for retirement, it’s not surprising to see that many believe a dream retirement is out of reach,” Schiffman said. “As an industry, we need to drive the benefits of planning, of investor education, of starting sooner to save in defined contribution plans and IRAs and investing for growth.”
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