“If you look at an advisor’s practice today and what’s going to happen in the future, there are some outside pressures that will affect the practice of that advisor,” remarks Dave Liebrock, executive VP of Fidelity Investments Institutional Services. He’s talking about the difference between retirement savings today and what they are likely to be in the near future–predominantly defined contribution plans. “[Clients] accumulate these assets and come to retirement, and they want know how much to take out and what they should be doing with the money.” To boot, the age wave of boomers will contribute a great deal to this changing landscape of the financial planning business. “You look at the baby boomers, who for the next 20 years are going to be a predominant source of an advisor’s business,” says Liebrock, “and the advisor’s practice is going to be based a lot on helping a majority of their aging clients understand how they should be paying themselves in retirement.” This transformation in who clients are and what they want from an advisor provides a great opportunity, he argues, but at a cost.
Fidelity Investments introduced a report in late April revealing that advisors who offer retirement income planning services have found that their clients are more satisfied, consolidate more assets with them, and provide more referrals for new business. Conducted by NFO Research on behalf of Fidelity from July 5 to July 12, 2006, this online survey included 813 investors between the ages of 55 and 70 with investable assets of $250,000 or more. The report, Adapting a Practice for Retirement Income Planning, found that those advisors who have built retirement income plans for their clients have attained a 50% increase in “very satisfied” clients. Seventy-seven percent of those same clients indicated they would be willing to move all of their assets to one advisor, and a considerable 95% said they would refer someone to the advisor. Furthermore, 94% of advisors surveyed by Fidelity expect their business to grow over the next five years as a result of offering retirement income planning, with almost a third expecting business to double.
More Complex, More Time-Consuming