These clients will make retirement planning a breeze, Goldman study suggests

These clients will make retirement planning a breeze, Goldman study suggests
Behavioral finance research reveals the traits that typically lead to the best retirement mindset.
NOV 16, 2023

Most people would say they want to have a comfortable retirement, but putting the necessary plans in place is not a given, even when working with a financial advisor.

But there are certain traits that some possess that make them more likely to adopt a "retirement mindset" and will likely make it easier to work with them on their retirement savings and goals, according to a new study.

Goldman Sachs Asset Management collaborated with behavioral finance research firm Syntoniq to discover what motivates and influences Americans to save for their retirement, based on a survey of more than 5,000 working and retired people.

Those with greater ease in preparing for retirement display four key traits: high optimism, high future orientation, high financial literacy and having a reward orientation rather than a risk orientation.

Respondents displaying the highest levels of these traits typically had larger retirement savings, were less stressed about managing their savings, and were better able to manage competing priorities.

Having high optimism was shown to be the most important factor in boosting retirement savings. Highly optimistic respondents are more likely to report that their retirement savings are on track or ahead of schedule (83%), compared to 41% with low optimism.

Having an optimized retirement mindset also led to higher levels of engagement with tasks such as creating financial plans and pivoting investments in volatile markets, compared to those with low levels of the four traits.

Having a personalized retirement plan is more common for those with high optimism (78% v. 42% with low optimism), reward focus (65% v. 55% with risk or prevention focus), and high future orientation (70% v. 48% with low future orientation).

HOW TO FIND THEM

Now the bad news. These clients may be hard to find as the study found that only 10% of the working cohort had all four traits while 85% have a blend of these along with suboptimal traits — low optimism, low future orientation, low financial literacy, and risk focus. The other 5% had high levels of these negative traits.

“The analysis suggests that people who are positive about their future may sacrifice for it in the present, establishing budgets, living below their means, and prioritizing long-term savings, while those who are primarily focused on their current quality of life may struggle with allocating to longer-term savings needs,” said Chris Ceder, senior retirement strategist with Goldman Sachs Asset Management.

Financial advisors may find using behavioral mindset as part of the personalization of their services by recognizing clients’ behavioral factors and educating them to avoid their potential behavioral pitfalls. 

 “Promoting optimism and future orientation may be important to encourage a savings mentality,” Ceder said. “Educational initiatives, communication campaigns and expanded services that promote our future selves may engage workers in their retirement mindset.”

Latest News

Farther debuts AI investment proposal tool for advisors to win clients
Farther debuts AI investment proposal tool for advisors to win clients

"Im glad to see that from a regulatory perspective, we're going to get the ability to show we're responsible [...] we'll have a little bit more freedom to innovate," Farther co-founder Brad Genser told InvestmentNews.

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

Are you optimally efficient?
Are you optimally efficient?

Taking a systematic approach to three key practice areas can help advisors gain confidence, get back time, and increase their opportunities.

Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida
Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida

Meanwhile, Osaic lures a high-net-worth advisor from Commonwealth in the Pacific Northwest.

Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B
Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B

The deals, which include its first stake in Ohio, push the national women-led firm up to $47 billion in assets.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.