What Do Affluent Boomer Retirees Think?

There's nothing more "money in motion" than IRA Rollover Assets. This year it is estimated that $250 billion will flow out of company plans into self-directed IRAs...in 3 million separate transactions. More than 50% of these assets are controlled by: Mass Affluent Baby Boomers. A recently completed study by Bain & Company, Affluent Boomer Pre-Retirement Survey, gives some insight into the thinking of these wealthy near-retirees.

• 66% of affluent boomers underestimate their retirement income needs.
• 60% would prefer owning a product that guarantees retirement income.
• Survey respondents state that "investment returns" are the most important factor in choosing an advisor, yet "cost" is the least important factor in their rollover decision.
• Most rollover decisions take place within a 6 month window...3 months before or after leaving a job.
• More than 50% of all rollover candidates rolled out of their existing corporate plan to their primary advisor.
• In level of importance, asset accumulation, asset protection and income planning rank more than 50% higher than tax or estate planning.

What conclusions can be drawn from this study? In the first place, I see the need for advisors to re-orient their thinking towards income planning and management. I say re-orient because so much of the thinking of the industry has been towards asset accumulation. Now we see a huge group of near-retirees who say that they prefer guaranteed retirement income...even at lower rates of return.

The second point concerns the 6-month window around the retirement event. That's not a window, that's a peephole. And if the majority of rollovers go to the existing primary advisors, then advisors need to find, and build relationships with, these near-retirees sooner rather than later. From a practical standpoint, how does an advisor identify and build relationships with, near-retirees who have not yet retired...and who have the majority of their investable wealth in their retirement plan?

The rollover event is becoming the best opportunity to provide full-service wealth management for mass affluent boomers. I think most of us knew this intuitively, yet it's nice to have some corroboration.

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