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Retirement Planning > Retirement Investing

Advisors Expanding Retirement Income Offerings, Survey Finds

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A new survey further confirms the growth opportunity for advisors from focusing on retirement income products and strategies. However, the report also notes heightened concern among brokers and RIAs with managing investment risk for investors.

The Continued Evolution of Retirement Income Delivery: An Analysis of Leading Practices in Advisor Support was released Tuesday, June 1, from consulting and research firms GDC Research and Practical Perspectives. It finds that 63% of advisors have experienced net growth in the past year in serving retirement income clients. Advisors are also finding baby boomer clients receptive to consolidating relationships. Moreover,while 91% of advisors believe they have the abilities to effectively serve new retirees, practitioners across channels are increasingly wary of how to manage investment risk for retirement income clients.

In general, 25% of advisors are now less confident in their ability to manage investment risk compared to one year ago, reflecting a combination of factors including the pace of market recovery, the potential for slow economic growth, and the low interest rate environment.

“One of the surprises that stood out from the survey was that advisors are increasingly concerned with managing risk,” says Howard Schneider, president of Practical Perspectives, the report’s co-author. “They really don’t have a grasp of what to do other than move into conservative investments, which in a low interest rate environment has significant drawbacks.”

According to Schneider, despite innovation with retirement income products that might mitigate this risk, few advisors are actually using them, preferring to rely on traditional mutual funds, fixed income products, money market funds and variable annuities.

“Retirement income support is distinct from the accumulation stage,” he adds. “While consensus exists on many of the effective accumulation strategies, the same cannot be said with retirement income. Few advisors really have the experience and knowledge to handle this area of their clients’ needs.”

Other highlights of the survey include:

86% of advisors believe that support for low balance retirement income clients takes as much effort and time as does support for more affluent clients.

Nearly 8 in 10 advisors have changed how they manage investment risk for retirement income clients compared to one year ago

The top concerns in serving retirement income clients reflect issues visible in public debate and that are difficult for advisors to predict including shifts in government programs and benefits (38% concerned), increased taxes (34% concerned), and managing rising health care expenses (28% concerned).

The providers used most frequently by advisors in building retirement income portfolios are leading mutual fund companies such as American Funds, Franklin Templeton and BlackRock/iShares that have not specifically created new solutions for this marketplace.

Advisors remain polarized in their attitudes toward annuities, with 55% concerned about the ability of annuity providers to deliver on long-term benefits and more than 9 in 10 focused on safety and credit rating in selecting an annuity provider.

John Sullivan is editor-in-chief of Boomer Market Advisor and


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