John Diehl, VP in the retirement solutions group of insurance giant The Hartford calls it "reverse engineering"--meeting the needs of individuals seeking to be as well equipped as possible for their retirement.
"Clients have a keen desire to segment and better understand their income needs today, and see how those translate into lump savings for the future," Diehl says. "We're seeing a move by individuals to want to first understand what their income needs are today, and based on that, come to an understanding of what they might spend in their retirement, and then look for guaranteed income sources."
In line with this process, The Hartford recently launched its Retirement Solutions Group, based in Simsbury, Connecticut, which comprises a team of retirement experts who will provide assistance on financial planning concepts for the firm's advisor clients. The idea of the Group, Diehl says, is a chairman-level initiative at The Hartford, and the beginning of an ongoing effort in the retirement planning space at the firm to offer a combination of much-needed educational and organizational resources and cutting-edge savings and income products. The initiative targets mainly Baby Boomers who will enter the 55 to 64 age bracket between now and 2020.
"We always read about Baby Boomers who are not saving enough, but much of this is due to people having their head in the sand because they do not really understand what's going on around them," Diehl says. "We all understand the concept of insuring tangible assets such as our home and our vehicle against loss. We need to begin insuring our retirement assets in the same way."
These days, retirement planning needs have moved beyond simply accumulating wealth into planning for both a secure income as well as a desired retirement lifestyle, and these can be difficult to achieve if one has to factor in risks such as inflation, market volatility, and increased longevity, Diehl says. "To help clients prepare for these risks, financial professionals must implement new strategies and make use of a wider range of insurance and investment products," he says, and so this is the mandate of the 15-member Retirement Solutions Group. The consultants, based throughout the U.S., are not product-specific, Diehl says, but rather focus on teaching concepts, and approaches. They work with clients to help them understand their current income needs and project these into the future, in order to come up with the ideal portfolio of products and asset classes that meet their needs and goals in retirement.
Education on the risks of planning for retirement is crucial, but equally important is adequate product selection. Not all clients, of course, would benefit from including the company's recently introduced Income Security product in their portfolio, but it is one of the options that consultants could propose, Diehl says, and the first in a line of income and longevity products that The Hartford is planning to launch.
The product is a single premium tax-deferred annuity, which guarantees lifetime income at a future point. With Income Security in place within a retirement portfolio, investors can manage their nest egg to a specific time horizon, Diehl says. The Hartford's product provides a future income "backstop," which then allows a previously unknown retirement time horizon to become a manageable period for investing one's retirement assets.
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