When it comes to mitigating risks for clients in retirement, advisors and product manufacturers must stitch together products and strategies that help clients meet the full spectrum of their needs–from long-term care, to income generation, to health care.
That was the message that Pam Schutz, head of Genworth Financial’s Retirement and Protection division, delivered to Genworth’s top advisors in early May in Washington. Only those advisors and manufacturers who “understand the full context of the retirement landscape,” she told advisors, will be able to capture the huge amount of retirement assets at play.
Consider research released recently by McKinsey & Co., she noted, which reported that more than 60% of assets in the U.S. are in retirement vehicles. To grab a portion of this “massive pool of money,” Schutz said, it’s imperative for advisors and manufacturers to work together so that they can address the full spectrum of retirement risk. Four client risks must be addressed, she said. The first is ensuring that a client’s investments meet expectations. At a minimum, advisors should ask if clients’ assets are properly allocated, and if they’ve made good fund choices. The second risk is determining whether a client will have adequate guaranteed income for life to cover the basics or more. Third is making sure clients take care of their healthcare costs. (In a separate conversation after her speech, Schutz said that while long-term care and Medicare supplements are available to help with healthcare costs, “if you look at the industry, there is some work to do on products and helping advisors integrate [those products].”) The fourth risk is determining whether a financial plan can withstand severe health risks or prolonged health problems.
To help consumers address their retirement risks, and execute successful business models, Schutz said five key components must be tackled: consumer education, products, advice models and technology, public policy, and thought leadership. To be more successful in affecting change within these components, Schutz said advisors should pick an area to focus on “and tighten and stitch together strategies in those areas.”