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April 15, 2007 at 04:00 PM
The race for rollover assets is on now that baby boomers have begun to enter retirement and to transition from accumulation to distribution of their assets.
In response, investment professionals are focusing on products and services that can help, in areas like estate planning, potential future health care need and longevity risk.
Most are well aware that planning for retirement goes beyond simply investing a set amount of money each month. What some may miss, however, is that true financial planning means looking beyond the portfolio to what the client truly desires in retirement. By helping pinpoint what will drive client happiness in retirement, professionals can then create a financial plan suited to actual needs.
Smart investment professionals know there is no one-size-fits-all retirement.
Just as individuals differ in career choices, dream vacations and spending habits, they also differ greatly in retirement expectations. Helping clients identify personal priorities and their ideal retired lifestyle will go far in ensuring their happiness throughout retirement–and in securing the advisor as a strategic and trusted investment professional.
But how to assist clients when it comes to personal happiness drivers? Are there ways to help clients determine what’s important to them not only for the first year of retirement, but for the entire 10, 20 or 30 years they may spend there?
One recent study found that individuals who are near or in retirement can be grouped into 5 segments based on what they want and expect.
For example, the “High-Timers” segment, representing 34% of the 467 respondents, want to maintain a very nice lifestyle throughout retirement. This includes wanting to be able to afford the “extras” for as long as they live, according to the Retirement Decisions study, which was conducted for Nationwide Financial, Columbus, Ohio, by Mathew Greenwald & Associates, Washington, D.C.
However, the High-Timers are not as concerned as other segments when it comes to providing financial support for their children or leaving an estate.
By comparison, the “Self-Sufficients” (17% of the Nationwide study) want to maintain their current lifestyle but are willing to give up some luxuries. They also place a higher priority on staying in their homes than other segments, and they are more likely to be retired already. (See chart for all segments.)
