From the March 2009 issue of Investment Advisor • Subscribe!

March 1, 2009

Complex and Customized, but Also Disconnected

Sidebar to the Cover Story "Patience"

Since retirement planning is now "more complex and more customized," says Dennis Gallant, the former Cerulli analyst and now president of his own research firm, GDC Consulting, advisors must adapt the structure of their firms if they wish to succeed in attracting and retaining clients who are in or near retirement. In the advisor best practices survey his firm conducted in collaboration with Howard Schneider of Practical Perspectives, Gallant found that the "best advisors are very deliberately looking at their businesses" to determine which retirement-related services to provide--such as selecting nursing homes for clients or making funeral arrangements--but also "how" to provide them and be compensated for those services. His research suggests that due to capacity and scalability issues, advisors will need to outsource to provide comprehensive, holistic advice, creating a broad network of support through third parties, external professionals, or their broker/dealer or custodial partners.

There are some other issues to consider when advisors are "doing the math' to determine retirement income needs, Gallant points out, including some common retired client disconnects:

o they typically spend more in the first few years of retirement

o they typically underestimate their life expectancy

o they don't understand inflation

o they are unrealistic about investment returns

o they need to redefine the concept of risk

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