A Little Change: Will it Do You Good?

As an adviser, it is necessary to be prepared for the many different “change” personalities, from those who go into change kicking and screaming to those who go with the flow, or even crave change. A five-question quiz and study from SecurePath by Transamerica classifies change styles among pre-retirees (ages 50 and older) into four archetypes: venturers, pursuers, adapters, and anchored.

“When dealing with participants, not everyone’s the same, and they make decisions for different reasons,” said Will Prest, chief marketing officer at Transamerica Retirement Management, in an interview with PLANADVISER.com. “Their ability to handle change will give you a lot of insight into what kind of help you can give them and what’s going to be the reason they make a change or make a decision.”

Here’s a breakdown of the types, according to the study:

Venturer

• 19% of the population
• Median household assets: $242,000
• Gender breakdown: 54% male; 46% female

The venturer motto is “with no risk, there is no reward.” These are the people who find change exciting and are unafraid of investing (maybe a few financial professionals in there). These folks are positive about retirement, feel prepared for retirement, are confident it will work out well, and even see it as being easier than other life experiences.

Out of all of the groups, venturers enjoy investing the most and are willing to take risks. Most of them (60%) are comfortable with mutual funds, 47% are comfortable about annuities, and 45% are comfortable with stocks. The majority (60%) are not too worried about fluctuations in their long-term investments. Venturers might either be the do-it-themselves type, or receptive to advisers, Prest said.

Adapters

• 33% of the population
• Median household assets: $233,000
• Gender breakdown: 55% female; 45% male

The largest number of Americans fall into the “adapter”category, finding change both exciting and stressful. Six in 10 agree with the statement “nothing ventured, nothing gained.”With every new life turn, they have been able to handle change more smoothly. Similar to venturers, they look forward to retirement and are confident they will have enough money. Most adapters plan to continue working in retirement, whether for personal fulfillment or to supplement their income.

When it comes to investing, half of adapters are comfortable with mutual funds, 37% are comfortable with annuities, and 39% are comfortable with stocks. About one-third (35%) say they are open to invest in vehicles with some risk. Prest noted that this group is the least confident about understanding products, which could be an area where advisers play a role. For the most part, he sees adapters as an adviser-receptive group.

Anchored

• 21% of the population
• Median household assets: $167,000
• Gender breakdown: 60% female; 40% male

Three of the four groups are pretty OK with change—but anchors are the outliers. As the name implies, anchors like to stay put. Setting out on the retirement voyage is not exciting for these folks. Many (40%) fear they will not have enough money. Most believe retirement is in their control, but they have worries about their life out of retirement. Only a third thinks that retirement will be the life they want. In retirement, the majority plan to work, mostly to earn extra money.

When it comes to investing, the anchored believe in mantras such as “don’t put all your eggs in one basket”and “better safe than sorry.” Less than half of them are comfortable with mutual funds (39%), and even less are comfortable with annuities and stocks (30% and 28%, respectively). “An adviser needs to connect with them personally and convince them they need a change,” Prest said.

Pursuers

• 28% of the population
• Median household assets: $132,000
• Gender breakdown: 54%; 46% female

Pursuers are an ambiguous group. They are never satisfied, always looking for the next best thing—as Prest put it, “they’re the kind of people that have seven different diet books” but can’t stick to one. Some think they control life, and others think life controls them. In retirement, they are the least confident group. They claim they need additional income and about half are not confident about living the life they want to live.

Like many things, when it comes to investments, pursuers are divided. In fact, this could be the most important segment for advisers, because pursuers need an adviser’s help to find the right approach. Not unlike anchors, pursuers are not too jazzed about risky investments, with only 37% reporting being comfortable with mutual funds. Only 28% feel comfortable with annuities and 23% feel comfortable with stocks. They are the faction most likely (76%) to have gone through a tough financial time. Prest said advisers usually can tell with pursuers that they really need a coach to help them understand they need a plan.

You or your clients can take the quiz here.