An amplified concern
Advisors pride themselves on their specialized retirement planning services, but it’s a role that’s getting harder and harder.
For one, clients are living longer, according to IMCA's Research Quarterly. That means many retirees, even those who availed themselves of savvy planning advice, are at risk of outliving their assets.
Also, even now, only a small percentage of clients make aggressive wealth accumulation a priority in their early working years. It’s hard for a planner to work with what’s not there.
Recognizing the biggest retirement planning challenges — for both clients and advisors — is the first step to providing the best service when it comes to later-life planning, the study says.
Click through the slideshow to see what other challenges IMCA suggests are on the horizon, and how to meet them.
For one, clients are living longer, according to IMCA's Research Quarterly. That means many retirees, even those who availed themselves of savvy planning advice, are at risk of outliving their assets.
Also, even now, only a small percentage of clients make aggressive wealth accumulation a priority in their early working years. It’s hard for a planner to work with what’s not there.
Recognizing the biggest retirement planning challenges — for both clients and advisors — is the first step to providing the best service when it comes to later-life planning, the study says.
Click through the slideshow to see what other challenges IMCA suggests are on the horizon, and how to meet them.
Key demographic
A majority of clients are older than 40. In fact, 92% of them are in this age bracket, according to IMCA.
The industry bright spot
On average, only half of households across age ranges and advisor channels have a formal retirement plan. This means that the remainder does not have specific income streams set for retirement. Advisors should actively revisit client’s financial plans because each new generation demonstrates a greater tendency to focus on short-term needs than their older peers, IMCA says.
Reframing retirement priorities
Only a small percentage of clients make aggressive wealth accumulation a priority in their early working years. If this trend continues, clients have limited time to compensate for the lack of savings or market-related mistakes before retirement.
Clients aren't the only ones aging
Advisors are far behind in their own retirement planning. Studies show most advisors have not made substantive plans for their practice after their own retirements. If these arrangements aren’t made far in advance, the firm risks losing clients and momentum. Advisors over 50 — or even younger — should have options in place far before they realize it’s time to step aside.
The accelerated effect
The number of advisors retiring soon seems small, but the percentage rapidly increases as the horizon nears. This means there’s a shrinking time window for both clients and advisors to address retirement planning issues that arise due to market movements or other shocks. Planners must have a succession plan well in place.
Greater expectations
Older clients place more emphasis on advisors' roles as fiduciaries. These clients have higher expectations for their planners’ time and responsibilities. Retiring advisors should plan ahead for a seamless client transition and adjust their expectations, IMCA says.
The practice's future
A majority of advisors have not identified their successors, IMCA says. This lack of planning could cause clients to flee if they don’t see a clear direction for their accounts.
Sale drivers
Advisors should carefully consider how client-mix characteristics will impact the sale of a practice. Firms with a large concentration of older clients are less appealing to many buyers because a younger client mix provides more constant revenue streams, according to IMCA.
Non-tangible concerns take precedence
Fears or emotions play a vital — but time consuming — role. Clients say that less-quantifiable factors, such as client transfers, are more important than more tangible concerns, such as dealing with tax regulations, IMCA says.
