Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Retirement Planning > Retirement Investing

Retirement Income Planning Wave Rolls Ashore

Your article was successfully shared with the contacts you provided.

Many U.S. financial advisors already are using annuities and life insurance policies to help clients convert retirement savings into retirement income.[@@]

Life and annuity products account for 3 of the 5 most popular tools in advisors’ income planning tool chests, according to researchers at Fidelity Investments Institutional Services Company, Boston.

The researchers commissioned a Web and telephone survey of 334 advisors in June.

Fidelity Investments Institutional is an affiliate of Fidelity Investments, Boston, the giant mutual fund company, and its survey found that stock mutual funds are the most popular retirement income planning tool in the advisor community: 74% of the survey participants said they often recommend stock funds to income planning clients.

But variable deferred annuities ranked second, with a 61% “often recommend” rate, and the “often recommend” rates were 40% for life insurance policies and 37% for income annuities, the Fidelity researchers write.

The researchers note that retirement income planning is a popular topic that is becoming more popular each day.

“Advisors are actively preparing to help an aging client base shift from asset accumulation to distribution,” says Marty Willis, executive vice president of Fidelity Investments Institutional.

About 43% of the survey participants’ clients are retired or are 5 years away from retirement, and 29% of advisors expect their firms’ retirement income planning business to at least double over the next 5 years, the Fidelity Investments Institutional researchers write.

Many financial services firms have been working for years to prepare for the looming shift to income planning strategies, from wealth accumulation strategies. Fidelity Investments Institutional has, for example, put together a team of retirement planning specialists and developed an income planning workbook.

Some demographers have been anticipating the coming flood of baby boomer retirements since the 1950s, and a few life insurance company marketers have been thinking about the effects of the aging of the boomers for nearly that long.

But a working group at the Employee Benefits Security Administration, an arm of the U.S. Department of Labor, helped crystallize concerns about boomer retirement income planning in 2001, by publishing a report on a hearing that repeatedly addressed income planning problems.

“It is a very complicated decision to figure out how much to take out each year, and it does expose [retirees] to this risk of outliving their resources,” said Alicia Munnell, a Boston University pension economist.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.