Advisors discussing retirement savings options with clients may be missing a valuable area of concern
With the return of volatility to the financial markets, discussions to prepare retirement savers for losses and unforeseen expenses are becoming more important. But while investor risk tolerance is well covered, advisors working with pre-retirees may be overlooking some crucial planning areas and options.
A new white paper titled Protection, Growth and Income: Helping Consumers Reach Retirement Goals outlines findings from a survey of more than 1,000 individuals and 300 financial professionals.
The study, conducted by Greenwald & Associates on behalf of AXA US and the Insured Retirement Institute (IRI), found that 78% of people working with a financial professional talk about risk tolerance with their advisor. However, only 50% said they have discussed guaranteed lifetime income, and only 18% have worked with their advisors to estimate healthcare costs in retirement.
“Clients want their financial professionals to move beyond the standard risk tolerance questionnaire and engage them in a thorough discussion of options, including income planning for healthcare expenses,” said Kevin Kennedy, who heads the Individual Retirement business at AXA US.
Conversations about income seem to be critical among retirement savers. The survey found that 56% of individuals rate their professional highly when lifetime income is discussed, compared to only 34% who do so when lifetime income is not discussed.
Kennedy added that financial professionals have the opportunity to work with their clients on exploring options that can help them get access to long-term market appreciation “while providing some protection from downside risk.” Among the individuals surveyed, nearly 80% said they are interested in learning about an option that offers principal protection and the potential for growth.
The survey also found prevailing concerns around retirement healthcare costs, with nearly 60% of individuals believed they were only somewhat or not very well prepared for a major health event. Those worries are compounded by the reality of inflation, which 92% recognized would likely have an impact on their retirement expenses.
“This research underscores financial professionals’ pivotal role in helping retirement savers to gain comfort around their ability to withstand market volatility and the potential role of high quality annuity products in helping to achieve financial security,” said IRI President and CEO Catherine Weatherford.
