Retirement Advocates Share Top Priorities With Congress

“I’m really interested in developments regarding longevity annuities,” MacKenzie said. “Just last year legislation was passed allowing people to put in up to $125,000 of their retirement savings into a qualifying longevity annuity. That money won’t be subject to minimum distribution requirements. It will allow people to purchase this long-term deferred annuity. Payments won’t begin until they’re 85 or so, but that is one of the biggest issues that people are not addressing – growing longevity, and this product is really designed to do that.”

Ensuring Retirement Advice is Credible

For Ed Gjertsen and Karen Nystrom of the Financial Planning Association, the most important retirement issue Congress could act on right now would be to better control who consumers get their retirement advice from. Specifically, is the advisor that a client meets with truly certified in the area of retirement planning?

“I think first and foremost the FPA is focused on how do we best protect the public in terms of how we’re handling their life savings and how we’re looking out for their financial health. That’s one of our top priorities in terms of having continual conversations with those in Washington,” said Gjertsen.

By financial health, Gjertsen is thinking long-term. His concern is not just with investment advice that a client might need at the moment, but what is the long-term strategy to help an individual best invest for long-term payoff and best retirement savings.

“I look at it this way,” Gjertsen said. “Most people know what they need to do to be in good physical health: eat less; exercise more. The same thing with finances for the most part. They know, ‘if I spend less and save more’ they might be in good financial health.”

Unfortunately, just like with diet and exercise, the spirit may be willing, but the flesh is often weak.

“We just fail to realize a lot of those endeavors for whatever reason,” Gjertsen said. “So I think part of the issue with the FPA and its members is to further educate the consumer in terms of long-term financial planning. The public is generally looking for good investment advice to help them keep up with their spending, rather than taking a holistic approach of saying ‘how do I make sure I’m looking at my best financial health in the best way possible.”

But how does the consumer know they are getting the best possible retirement advice? Often they may not, Gjertsen says.

“What often happens is that an individual is doing it on his own or her own; they think they’re on a good plan; and then all of a sudden something happens and they have a financial crisis,” Gjertsen said. “That is when they seek professional advice in regards to regaining their financial health.”

That is one of the most important issues that consumers are facing, Gjertsen said. Consumers may not really appreciate the qualifications of the advisor, “because, quite frankly, anyone can call themselves a financial planner.”

That is where the government can step into the picture, Nystrom said.

“I think that if we could deliver a message to Congress that would be heard it would be about a unified fiduciary standard for all who provide personalized investment advice, for all who provide advice to consumers,” Nystrom said. “We know, and everybody knows, in the last 20 years things have become much more complicated. It’s not going to get less complicated.”

“Consumers need a professional in their corner acting in a fiduciary role to help them,” Nystrom said. “Right now that doesn’t exist, because there are different standards depending on how you’re compensated. That is something the consumer is not going to understand, so Congress really does need to act on a fiduciary standard, so everybody gets the same level of care when they approach a financial professional.”