Just as the term "Golden Years" has fallen by the wayside, the entire concept of a traditional "retirement" may be on the verge of becoming obsolete.

If that happens, one of the core tenets of the mutual fund industry also falls away: squirreling away savings for a full-time retirement.

With many retirement savings tools telling investors they need to prepare for 30 years or more in retirement and have at least $1 million in savings, investors feel they are hitting a brick wall. They are finding that goal increasingly hard to reach, in a weak economy. And now, they also face the additional risk that inflation may pick up speed.

But retirement is not what investors are looking for. Instead, they would like to have at least enough money to tell their employer "Bug Off" and confidently walk away from their job with a good amount of "Freedom Money."

This was one of the startling findings of recent in-depth focus groups with 72 mid-career investors between the ages of 28 and 64 by Hearts & Wallets. The research firm's aim was to explore the major obstacles preventing investors from saving adequately for retirement.

These focus group participants bought into the idea of actively preparing for retirement. Each had a minimum of $100,000 in investable assets, with an average of $250,000 to $1 million. The interviews were conducted in Boston, Chicago and Los Angeles in June for Hearts & Wallets' report, "Inside the Minds of Mid-Career Accumulators: Why They Aren't Saving Enough for Retirement."

For 60% of these actively engaged investors, particularly those younger than 50, the idea of "retiring" is just not resonating.

And the idea of "retirement savings"? They aren't buying it.

For most investors, the idea of retirement is becoming a meaningless, unachievable pipe dream being foisted on them by asset managers and financial planners more interested in scaring them into building up coffers in order to boost their own commissions and fees, than they are their clients' actual well-being in their senior years.

"Investors told us that retirement is simply unknowable, unpredictable, unachievable-and possibly not smart," said Laura Varas, a principal with Hearts & Wallets.

Many said that the retirement marketing and sales pitches by asset management firms seemed no better than a gypsy presenting them with a "crystal ball," Varas added.

"They told us, 'If somebody told me they knew the future, not only would I not believe them, but I would think they were a charlatan,'" she said.

Said one jaded investor in Boston: "They've ganged up the system to their advantage."

One of the most important service dimensions is empathy and understanding, Varas stressed. "When we as an industry fail to talk about our customers' future the way they see it, they think we don't get them. Not only is this not good, but it is seriously detrimental."

While it would be too radical for the retirement savings industry to rename itself, Varas admitted, individual marketing, advertising and sales pitches by asset management firms and 401(k) providers need to begin to embrace brand new nomenclature and a positive, achievable direction.

It may be too early to find that exact hook, Hearts & Wallets researchers said, but it should be along the lines of, to put it politely, "Bug Off."

Or more bluntly: "F*** Off."

"This doesn't mean Dennis Hopper getting on a motorcycle," Varas explained. "It is a word that means 'Bug Off.' It starts with the letter 'F,' which it why we decided to call it Freedom Money."

The idea is that as people enter their senior years, they have at least some money to walk away from a job they don't like, if they feel they are facing age discrimination, if they have another career or part-time job they would like to pursue-or if they have simply become unemployable due to illness, Hearts & Wallets said.

"We saw the reaction to 'Bug Off' clearly on the investors' faces in the focus groups. They understand what that feels like. This 'Bug Off' money made them smile," Varas said. They may not actually walk away from their job. They just want to know that they could, she said.

Another key finding of the research was that accumulators feel the financial services industry is set up to benefit financial services firms at their expense, added Chris Brown, another principal with Hearts & Wallets. For all the industry's talk since the economic downturn about rebuilding trust, investors do not believe anything has changed, he said.

The first step in improving customer service, Hearts & Wallets says, is for the industry to go back to the drawing board on its fee structure and offer a complete menu of various levels of advice, as well as products, at different price points. And, most importantly, the industry needs to clearly explain to investors what its value proposition is and why investors are paying these fees.

With the average large-cap equity fund down 11% so far this year, fees are once again under the microscope. But investors will begin to scrutinize them even more so beginning April 1, when the Department of Labor will begin to require 401(k) plans to disclose their charges, Brown and Varas said.

Rather than categorize investors into black-and-white boxes of "self-directed" or "advisory," Hearts & Wallets says that people are actually a blend of the two. Hearts & Wallets has developed a new name for those interested in more advice: "Upsizers." Those interested in becoming more self-directed, Hearts & Wallets is calling "Downsizers."

Right now, the pricing model for asset management firms, brokers and financial planners is a choice of either fees or commissions. The industry needs a new slate of choices, Hearts & Wallets says.

 

Four Reasons Accumulators Are Not Saving Enough

1.)"Retirement" doesn't resonate as a likely future for many people, any more.

2.)"Freedom Money" better describes investors' retirement savings goals.

3.)The financial services industry is seen as more interested in profits than its customers.

4.)Investors are looking for a wider array of fees and need to be given a clear value proposition as to what they are paying for.

Source: Hearts & Wallets

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