Advisers advising, but boomers not buying, survey finds

APR 18, 2011
Sure, everybody complains about the weather, but nobody does anything about it. The same can be said for baby boomers, who continue to worry about their retirement savings but do precious little to change the situation. According to a recent survey conducted by MetLife Inc., nearly half the boomers polled said that they check their retirement balance at least once a week. Eight of 10 check the amount at least once a month. Nevertheless, only a third said that they are confident about their investments.

LACK OF ACTION

Not surprisingly, financial advisers surveyed by MetLife said that they are concerned about this lack of action by their clients. In fact, 72% said they have recommended to their clients that they up their kick-in to the retirement plans. Just 18% of boomers said that they have done that in the past year. Why? Volatility has them worried, with a bit more than half the polled boomers saying that their comfort zone for volatility or rapid swings up or down in the value of their investments, is 10% or less. One-quarter of boom-ers said they are comfortable only with a 5% allocation to potentially volatile instruments. “With the market recovery, boomers are starting to become more confident about investing in equities, but volatility continues to be top-of-mind and a significant concern,” Robert E. Sollmann, Jr., executive vice president of retirement products at MetLife, said in a statement.  About 75% of all in-vestors said that they were concerned about market volatility even when the market is going up, and just 29% of investors who didn't use an adviser said that they felt confident in their investments. That figure rose to 34% for investors who did have an adviser. Investors with more than $200,000 in investible assets generally have a lower tolerance for volatility than those with less money to invest, and the entire group increasingly questions the traditional approach to investing, which allocates funds to a mixture of stock- and bond-related investments, said Julia Lennox, MetLife's vice president of retirement products. A majority of both advisers and investors said they are no longer sure the traditional way was the best approach. “It feels like advisers are convinced that something different needs to be done, but they are not necessarily communicating that to clients,” Ms. Lennox said. There has been more interest in annuities since the market crash, and she said that she also sees increasing interest in funds that focus on managing risk and volatility within a defined range, rather than exclusively on returns.  “Those are the kinds of funds used in the institutional investment area with pension funds and endowments, and they are increasingly being offered in the retail space,” Ms. Lennox said. As nervous as boomers are, the situation has improved from two years ago, when 75% of respondents said that they were more focused on protection against losses than participating in market gains. This year, the split is about half and half. MetLife developed its Market Volatility Poll through an online survey it conducted in February of 520 advisers and 1,038 adults over 45 with at least $100,000 to invest. Interestingly, 71% of advisers said that they recommend that clients reallocate their investment portfolios. Just 29% of boomers said that they have done that in the past year. Likewise, just 5% of boomers have formalized a written retirement plan, even though about half the surveyed advisers said that they have suggested the idea to clients. E-mail Lavonne Kuykendall at [email protected].

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