While the growth of client assets and accumulation of wealth remain a crucial focus for financial advisors, retirees make up a large and growing segment of the population and are seeking better ways to manage their assets as they enter the decumulation stage. With the uncertainty of adequate savings, retirees need more help than ever to ensure they draw down assets effectively – but more importantly, where can they start?
Today, baby boomers are retiring and need help planning and executing an effective decumulation strategy. The fact is many clients in retirement still feel undereducated on what exactly they should do during the ‘decumulation’ part of their lives. According to Nobel Prize-winning economist William Sharpe, retirement income planning is “the hardest and nastiest problem in finance.” While the individuals in the ultra-high net worth (UHNW) markets are typically catered to with a personal concierge service and can self-fund their retirement needs, all other segments of retirees such as mass affluent and high net worth do not have access to the same tailored service and to address their concerns.
With the rise of advanced tools and technology and numerous strategies to choose from, clients not only feel lost but overwhelmed about how to consolidate these assets best and make them last, among other concerns. Solving this problem is where advisors become the differentiator. While there has been plenty of financial planning technology introduced to end consumers, they are limited in their ability to plan distribution and withdrawal plans heading into and throughout retirement. With their client’s best interest in mind, the responsibility of solving this dilemma sits squarely with the advisor.
Not only does the advisor need to bring awareness to existing services, but they also need to educate their clients on how to use them and provide advice on any gaps in plans not addressed by these existing services. Currently, you can’t solve this problem easily since most advisor tools can’t guide clients through their decumulation phase accurately.
Throughout this paper, we explore the challenges faced by retirees today, and the potential opportunities for both the firms and advisors on how to serve the retirement population best.