Financial advisors need to step outside their retirement planning “comfort zone” to partake in an age abundant with retirement planning opportunity that just begins with baby boomers, a new survey suggests.
Every day, another 10,000 baby boomers turn age 65, according to LIMRA. There are 42 million retirees in the U.S., and that number is expected to grow to 65 million by 2025.
Although the baby-boomer generation represents an “unprecedented demographic shift,” boomers themselves are just beginning of opportunity in offering retirement planning services, said Matthew Drinkwater, associate managing director of retirement research for LIMRA, during a recent teleconference.
Pre-retirees, people within five years of retirement, also hold the bulk of assets at $15.5 trillion, compared to the $3.9 trillion held by partial retirees and $6.5 trillion held by full retirees, a 2010 LIMRA study found.
Yet two-thirds of non-retired Americans are not confident that they are saving enough money to last throughout their retirement, according to the LIMRA survey.
The survey also found that just 56% of retirees said their advisor helps them with minimizing exposure tor retirement risks; and 34% said their advisor helps with retirement income and estate planning.
Although retirement income services are almost universally offered by advisors, the survey found just 25% of advisors have 100 or more retirement income clients.
“Advisors generally offer retirement planning services that are within their comfort zone of asset and invest management, but the name of the game in retirement is generating income and risk management,” Drinkwater said. “So, to bring their planning practices to the next level, advisors need to broaden their scope to be able to provide advice that covers other key things that retirees face such as when to claim Social Security or pension, planning for health care costs, etc.”
Companies can help advisors by providing specialized training through wholesalers or by sponsoring certification programs, according to Drinkwater.
“Advisors have shown a great interest in receiving training for non-customary, specialty services,” Drinkwater said. “Advisors need to address the expanding scope of retirement planning assistance that their clients might need, and to do that they need to obtain the expertise required to answer the growing demand for these services.”
Formal written retirement plans play a “critical” role in most advisors’ practices, LIMRA reported. About 60% of advisors say that formal written plans are well received by their clients, although 30% of pre-retirees who have worked with an advisor have a written retirement plan.
Advisors say formal written plan offers a variety of benefits to their clients and their overall business because they provide: an “easy” way to discuss product solutions (83%); better understanding of their clients goals (82%); higher client retention (81%); the ability to obtain more rollover assets (72%); and the ability to attract more referral business (71%).
