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Written Retirement Plans Help Increase Referrals, Asset Concentration

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Written retirement plans aren’t just good for clients; research released Monday by Fidelity Investments found that advisors who provide written retirement plans for their clients score higher in client satisfaction, and receive more referrals and higher concentrations of client assets.

Eighty-one percent of pre-retirees said having a detailed retirement plan is important, but just half of pre-retirees who work with an advisor and have a retirement income plan have a written, detailed plan.

“Our survey found that advisors face a range of challenges that can make ‘writing a retirement income plan’ feel extremely complex — and for that reason, many are opting for more informal planning processes,” Larry Sinsimer, senior vice president of practice management for Fidelity Investments Institutional Services Company, said in a press release.

Fidelity lists several reasons for advisors’ seeming reluctance to write up a retirement plan for their clients, not least of which is that in today’s economy, plans may become obsolete too quickly.

Still, advisors who helped their clients develop written retirement plans saw clients who were “very satisfied” with their advisors’ service increase from 63% among pre-retirees to 69% among retired clients. “Very satisfied” pre-retirees consolidated 72% of their assets with their primary advisor, according to Fidelity, and “very satisfied” retirees consolidated 81% of their assets. Furthermore, 79% of “very satisfied” pre-retirees and 83% of retirees referred business to their primary advisor.

“Investors are looking to simplify in retirement and part of that means consolidating the number of advisors with whom they are working,” Sinsimer added. “Retirement assets are going to flow to the advisor with the credible solutionfor retirement income planning, which does not have to be a complicated solution.”

Even with a written retirement plan, clients still face challenges to a successful retirement including misalignment between spouses on retirement goals; supporting other family members at the expense of their retirement savings; underestimating the lifestyle they want to live in retirement; strong emotional attachments to inheritances; and “number numbness,” or some clients’ propensity to look at their retirement savings as a “pile of cash” rather than a source of income that should last the rest of their lives.

These challenges are especially relevant for new retirees, who are more likely to have no pension plan and will likely rely entirely on their savings for retirement. Fidelity found that even among retirees of the same age individual needs can be wildly different, causing an evolution in retirement income planning from an age- or asset-based process, to a highly nuanced and individualized one.


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