Spouses Play Increasingly Influential Role Alongside Advisers

A new report from Hearts & Wallets assesses the state of retirement income planning through the eyes of older affluent consumers.

The report, “Retirement Income to Goals-Based Wealth Management,” focuses on U.S. retirement savers ages 53 years and older with more than $100,000 in investable assets. According to Hearts & Wallets researchers, this demographic segment’s consumer engagement with traditional retirement income planning tools has declined over the past few years, as households juggle multiple financial goals and grapple with when to stop full-time work.

In 2008, 82% said they had a written plan or solid idea about this question of timing retirement, in comparison with 73% in 2016.

“As old rhythms of life, from pensions to firm retirement dates, fall by the wayside, goals-based wealth management emerges as a means to accommodate competing life goals, such as saving for a new home or a child’s college, and new lifestyles,” researchers suggest.

Of nine wealth planning components, consumers’ need for one traditionally key component—recommended selection of investments that will generate income in retirement—has declined over time, even as demand has increased for other advisory program components. The biggest unmet advisory consumer need, according to Hearts & Wallets, is “recommendations for minimizing taxes.” For context, only 21% of consumers cite a need for support with investment selection, compared with 44% who say tax advice is an unmet need.

Laura Varas, CEO and founder of Hearts & Wallets, notes that retirement savings efforts are directly affected by the “changing nature of work and the growing disconnect between retirement savings programs and the employer.” Although “Started thinking more about retiring” remains the most common inspiration for planning toward specific financial goals, the most surprising trend, according to Varas, is that spouses are becoming more important, while advisers are decreasing in importance.

“The spouse inspires one out of five conversations, and this is growing,” Varas continues. “The adviser is still higher, at one out of four, but is falling over time. The influence of the spouse jumped across all asset levels and across the industry.”

Put simply, spouses remain more influential than employers, Hearts & Wallets says, but the influence of the employer is much higher at firms with strong defined contribution (DC) businesses.