A report released by GDC Research and Practical Perspectives on Thursday studied the relationship between advisors and product providers, like asset managers and insurance companies, and found opportunities for those providers to help advisors serve their clients better.
Advisors understand rising interest rates will have an impact on their clients’ retirement income, but the industry hasn’t accepted a common methodology for addressing that issue, the report found. That makes it difficult for product providers to address advisors’ needs.
Indeed, fewer than 20% of advisors said they were highly satisfied with the support they were receiving from asset managers or insurance companies on retirement income strategies. With more than 70% of advisors serving a greater number of retirement income clients, effective support is important.
“There is significant demand for solutions that advisors can use with retirement income clients,” Howard Schneider, president of Practical Perspectives and co-author of the report, said in a statement. “Managing portfolios to achieve the multiple goals of retirement clients is a critical and growing element of most practices. Yet the delivery of retirement income support remains highly customized and nuanced, making it hard for product providers to gain focus and traction in this marketplace.”
The report found there are three main methodologies for advisors when it comes to retirement income for their clients: risk-adjusted total return, pooled or time segmented, and income floor. Although the risk-adjusted total return method was most widely used, advisors who use the income floor method reported the highest level of confidence in helping their clients meet their income goals.