Addressing Changing Attitudes Toward Retirement Planning

Close to half (47%) of financial advisers indicate that their clients are embracing novel retirement strategies, like working during retirement, that diverge considerably from the approaches of previous generations, according to Nationwide’s ninth annual “Advisor Authority” survey, powered by the Nationwide Retirement Institute.

To shield client assets from market volatility, advisers are implementing various tactics, including:

• 79% using annuities;
• 77% employing diversification with non-correlated assets; and
• 58% incorporating liquid alternatives such as mutual bonds or ETFs.

The findings also show that advisers have observed their clients adopting unconventional methods, sometimes risky, to fulfill financial obligations during retirement.

Among advisers, 34% noted that clients are increasingly tapping into retirement accounts to meet these commitments. Additionally, nearly a quarter, 23%, of financial advisers reported clients liquidating assets, while 16% mentioned clients choosing to reside with adult children.

Evolving Industry

Nate Moody, partner and retirement plan adviser at Lebel & Harrison, sees the transformation in retirement approach less as a generational shift and more as a natural evolution based on changing consumer preferences, recent legislation and technological innovation.

“With an increased focus on fees, many individuals are finding their workplace retirement plan offers a much lower investing price point than rolling their assets over to an individual retirement account and hiring a financial adviser,” he says.

He added that legislation like the Setting Every Community Up for Retirement Enhancement Act of 2019 has opened the door to allow for in-plan annuity options to help individuals address the “decumulation” phase of retirement. Additionally, technological innovation reduces the friction historically associated with taking periodic distributions from a workplace plan and assists with establishing a sustainable withdrawal strategy in retirement.

“Functionally speaking, you are seeing workplace defined contribution retirement plans adding many of the features of the ‘old’ defined benefit plans, albeit funded primarily with employee dollars,” says Moody.

Apprehensive Investors

Meanwhile, inflation and other financial stressors may be playing a role in clients shifting retirement saving tactics, according to Nationwide.

Amid growing investor apprehensions, financial advisers are offering strategic solutions to prepare clients for retirement. Almost half of advisers (48%) indicate that the escalating expenses of daily life have prompted their clients to reconsider or recalibrate their retirement planning approaches.

“It’s clear that having a trusted adviser makes a difference when it comes to feeling confident about living comfortably in retirement,” Rona Guymon, senior vice president of Nationwide Annuity Distribution, said in a statement. “Advisers and financial professionals should seize this opportunity to engage with their clients to reinforce the importance of sticking to their long-term plan.”

The research was conducted online within the U.S. by The Harris Poll on behalf of Nationwide from January 8 to 23, among 518 advisers and financial professionals and 2,346 investors.

Correction: Fixes misspelled name.