Advisers Losing Confidence in Their Retirement Income Prowess

Thirty-six percent of financial advisers are less confident than they were a year about in their ability to manage reitrees’ assets—with most blaming the complexity of retirement income portfolios needing to both generate growth while guaranteeing income, GDC Research and Practical Perspectives found through a survey.

Seventy-seven percent have changed how they allocate assets in response to the market environment, and 14% have changed the way they build retirement income portfolios.

Respondents said that building retirement income portfolios is more complex, time consuming and needful of being customized, and will only become increasingly so.

“While virtually all advisers agree that retirement portfolios must support dual goals of providing consistent income and long-term asset growth, there is little agreement on the best method to achieve these objectives,” said Dennis Gallant, president of GDC Research and co-author of the report with Practical Perspectives, “Examining Best Practices in Constructing Retirement Income Portfolios.”

Advisers feel tremendously responsible for their clients being able to “meet basic living expenses, such as shelter, food, energy and healthcare, [and this] has never been more of a challenge for advisers,” said Howard Schneider, president of Practical Perspectives.

Advisers are split on whether they take a risk-adjusted total return approach to clients’ portfolios (54%) or divide investments into various pools (46%). Most said they would like asset management firms to help them with the overall retirement income process rather than create additional solutions, which they are currently satisfied with.

Most said they were not interested in the newer retirement income solutions and preferred familiar investment vehicles and trusted providers. Nonetheless, the advisers relied on a wide array of mutual fund and insurance companies, with only one firm, American Funds, used by at least 20% of the advisers surveyed.