Wealthy boomers who are avidly looking forward to popping open their finest Dom Prignon champagne bottles upon reaching retirement age might want to keep them stashed indefinitely in the wine cellar. They might, at any rate, after reading a new survey from The Phoenix Companies.

The report, titled 2004 Phoenix Wealth Survey, portrays high net worth individuals (most of them boomers) as more confident about their financial position and less gun-shy about investing than in recent years. Yet, theyre no more knowledgeable than before about financial matters and, in particular, retirement planning needs.

This is a scary combination, says Jack Sharry, a senior vice president of marketing and asset management distribution at the Phoenix Companies, Hartford, Conn. The conclusion we drew is that theyre underfunded, underaware and underadvised.

Harris Interactive, a Rochester, N.Y.-based market research and consulting firm, conducted this fifth annual online survey on behalf of Phoenix from January to February 2004. The poll sampled 2,804 of an estimated 6 million high net worth (HNW) individuals in the U.S.

Of the total, 55% were boomers. The average age of respondents was 58, the eldest of the 76 million boomers born between 1946 and 1964.

To qualify for the survey, respondents had to have $1 million in liquid assets (excluding the value of their home).

The reports authors found heightened optimism on several questions. For example, 30% said they were very optimistic about their financial future, as compared with 18% in 2003. And 38% percent noted their long-term wealth was extremely or very secure, up 4% from 2003.

Similarly, 41% said that, to make money, I need to take above-average risks, up from 37% in 2003. Half of respondents said they make decisions without consulting financial professionals, up 3% from the year prior. And 50% said they were very or fairly knowledgeable about stock market activity.

However, only 34% stated they have assured a comfortable standard of living during retirement. Seventy-seven percent expect they will retire with at least 80% ($162,000 on average) of their current annual income.

To guarantee the last figure for life, says Sharry, individuals would have to deposit on average $2.2 million in an immediate annuity. For the polled group, the average net worth totaled $2.6 million.

Technically, they can get there [$162,000], says Sharry. But the $2.6 million doesnt account for inflation, rising health care costs and catastrophes that might occur.

Advisors can help close the financial gap. But many producers, adds Sharry, either play no role in respondents financial planning or are not viewed well.

The survey notes that one in 5 high net worth individuals is without a financial advisor. One in 12 is looking for a new advisor. One in 8 isnt sure whether to stay loyal. And one in 5 is inclined to bolt.

Additionally, 63% and 69% of respondents, respectively, do not have written financial and estate plans.

Many respondents also believe theyre paying too much in fees for the advice theyre getting. The strength of that belief, says Sharry, tends to be inversely proportional to the performance of their portfolios.

With both the economy and stock market on the mend, the number of HNWs expressing dissatisfaction with their advisors is likely to decline, adds Sharry. But he notes the perception problem cannot wholly be attributed to market volatility.

Other factorslack of adequate contact between client and producer, a rise in the number of do-it-yourself investors and, not least, advisors ill-preparedness to deal with some aspects of retirement planningalso play a role.

Many producers are still not well equipped to advise boomers on optimizing income during asset distribution, as opposed to the wealth accumulation phase, he says. Thats not what we as an industry have focused on.

Sharry says advisors needing to get up to speed should take advantage of advanced asset allocation tools and programs that address income optimization and estate planning topics.

The report also concludes that full-service brokers have lost ground in the high net worth market during the past three years. Currently, just 17% of HNW householdsless than 2 in 10use a full-service broker. Thats down from 32% (approximately 1 in 3) in 2002.


Reproduced from National Underwriter Edition, June 25, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.