Advisers Face Obstacles in Product Options and Client Expectations

In its quarterly Financial Performance Outlook survey, Russell Investments ventured into new areas. A number of results were about retirement income planning.

Advisers do not see their clients as focusing on the right retirement goals. They reported that only 54% of their clients have realistic expectations about the amount of income their investments will provide them in retirement.

Nearly three-quarters (72% of the advisers surveyed said that retirement income planning is either a large or core part of their practice, with another 23% indicating it to be a small but regular component.

Many advisers are also dedicating time to learning more about retirement income planning and strategies—more than 98% of respondents said they are trying to build expertise in retirement income planning. However, advisers also indicated there is no consensus on the right resources to consult. Respondents reported they are turning to a variety of sources, including online material and books (68%), industry peers (52%), fund companies (49%) and accredited courses (45%).

Advisers reported that in order to help clients achieve retirement income goals, they often or always recommend a diversified portfolio of mutual funds (75%), dividend-paying equity funds (64%) or bond funds (51%). Immediate annuities and fixed annuities were among the least popular options, with 61% and 64% respectively saying they rarely or never recommend them for retirement income planning

Other key findings of the survey are:

• Advisers are committed to learning more: Almost all (98%) are dedicating more time to increasing their knowledge of retirement income planning.
• Running out of money is a common topic of conversation for both advisers and clients: 38% of advisers named it as a subject of conversation they initiate with clients, and 34% said that clients are bringing it up themselves
• Retirement is a crucial part of the practice: Out of the advisers surveyed, 72% said that retirement income planning is a core or large part of their practice.
• However, there seems to be no consensus on how to build expertise in retirement income planning:  Advisers are consulting many sources including online material and books (68%), industry peers (52%), fund companies (49%) and accredited courses (45%)
• How are advisers constructing portfolios to meet retirement goals? 75% recommend diversified portfolio of mutual funds, 64% recommend dividend-paying equity funds and 51% recommend bond funds

The survey includes responses from more than 350 financial advisers working in 122 national, regional and independent advisory firms nationwide.

More about the Financial Professional Outlook survey is available here.