From the March 2007 issue of Investment Advisor • Subscribe!

March 1, 2007

Your Partners' Role In Retirement Planning

Schwab Institutional COO sees a "giant psychographic shift" and "fantastic growth opportunity" for independent advisors

"Advisors have been in the retirement business since day one," admits Charles Goldman, but a "giant psychographic shift" has occurred among boomer preretirees who are more likely to eschew the services of someone affiliated with a big company to help them prepare for retirement.

Goldman, COO of Schwab Institutional, cites McKinsey research to illustrate that shift and the "fantastic growth opportunity" it presents for independent advisors: Preretirees with more than $1 million in investable assets were four times more likely, McKinsey found, than their parents to look toward an independent advisor for their retirement advice. The preretirement period, he points out, is when people traditionally pick an advisor.

Goldman believes SI's role in helping advisors profit from that opportunity is threefold: to provide information, "what do advisors need to know to help their end clients" protect their assets--everything from long-term care insurance to variable annuities to structured products; to provide the tools to illustrate what the "economic impact" of these products is for clients; and finally to help manufacturers build advisor products that meet clients' needs but are more efficient than those available now, such as variable annuities.

But another finding from the same McKinsey study illustrates what might be a lost opportunity. Those affluent preretirees were twice as likely as their parents to look to insurance companies for retirement advice. "The interpretation" of that finding, says Goldman, "is that these investors are looking for strategies to generate income, that have a guaranteed component, and have a decumulation component. RIAs are not delivering those yet in the way they have to."

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