What financial advisers really think about retirement

A survey finds that while advisers are still cautious, confidence in their clients' retirement is strong

May 15, 2014 @ 12:55 pm

By Carl O'Donnell

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If there's one consequence of the financial crisis that we can all be sure of, it's that market participants have become more conservative – and advisers are no exception.

The all-important goal of generating income for clients in retirement ranked as the first priority among 449 financial advisers who were surveyed on retirement income by InvestmentNews between March 12 and April 24. Coming in as the second most-valued priority among advisers is simply preserving clients' capital. Participating in market upside, meanwhile, ranks dead last.

(More: The latest on Retirement Income from our latest Special Report )

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Despite advisers' focus on retirement income, hitting that benchmark is becoming increasingly difficult. The biggest concern among advisers is meeting the rising cost of healthcare. Second most important? Social security claiming strategies.

That shouldn't come as a surprise. The most common challenge among advisers' clients is sufficient asset accumulation. This is especially true since most advisers recommend retired clients tap only a small portion of their portfolios each year: 4% on average.

(Related: Turn spenders into savers with a behavioral approach)

One concern that isn't keeping advisers up at night? Not too many clients are planning on leaving a legacy, the survey said.

Despite the challenges, most advisers ultimately pull through. A full 80% of advisers say that more than half of their clients will be able to maintain their current lifestyle in retirement, according the survey.

This might be why clients' trust of advisers is still going strong. The most important trait of any investment has nothing to do with its financial nuts-and-bolts, surveyed investors said. A plurality – 28% – of investors say the most valuable characteristic an investment can have is a recommendation by his or her adviser.

More from Robert DeChellis, president of Allianz Life Financial Services, on the unique needs of baby boomers in retirement.


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