Advisors and clients aren't clicking on retirement planning

The latest findings from the Alliance for Lifetime Income's annual Protected Retirement Income and Planning study show significant disparities in retirement planning conversations between financial professionals and their clients.

The third chapter of the 2024 study, which surveys both consumers and advisors, highlights areas where communication is falling short, particularly around protected income, Social Security, and long-term care.

Jean Statler, CEO of the Alliance for Lifetime Income, said the results of its poll covering more than 2,500 consumers, including 567 investors with over $150,000 in investable assets, "should serve as a wake-up call."

“There’s a clear and concerning gap between what investors need and want versus what many financial professionals are communicating when it comes to planning for retirement,” Statler said in a statement.

A major disconnect emerged in discussions about protected income as 62 percent of financial professionals say they bring up the topic with clients, yet only 27 percent of investors agree that these conversations happen. And while nearly all investors surveyed believe protecting their retirement assets is important, only 79 percent of financial professionals share that sentiment.

Another critical disjoint concerns discussions around retirement income strategies.While a near-unanimous 98 percent of financial professionals claimed they've touched on sources of protected income such as Social Security and annuities, just 69 percent of clients remember these topics being brought up. In a parallel finding, 92 percent of FPs said they help clients determine when they should claim Social Security benefits, just 22 percent of clients said their FPS helped them most with that decision.

Similar gaps exist in areas like withdrawal strategies (95 percent of professionals say discuss the ideal timing of withdrawals from certain accounts, compared to only 66 percent of clients) and tax minimization (95 percent of FPs vs. 64 percent of clients).

Financial professionals might also be failing to recognize their clients' actual needs. Six in 10 investors imagine they'll require some form of assisted care in the future, but only 34 percent of financial professionals think so. Meanwhile, 81 percent of clients agree annuities or protected income products within workplace retirement plans are at least somewhat helpful, compared to just 68 percent of tinancial professionals who said the same.

"There's growing consumer interest and demand for protection, but we need to bridge this communication divide to ensure that all those approaching retirement feel prepared and protected for the years ahead," Statler said.