Even with a majority of financial advisers agreeing that retirement
planning is a major part of their business, conflict persists over how to
track retirees’ success in meeting financial goals.
That’s the upshot of the Q3 Financial Professional Outlook survey, released
Thursday by Russell Investments. Survey researchers found that more than seven
in 10 (73%) advisers count retirement planning as a significant or core part of
their work, but that majority continues to use a plurality of methods to actually
measure client success.
The definitions advisers use to measure client outcomes
break down as follows: Slightly more than one-third (34%) of advisers pointed
to the preservation of principal after distributions as the best method to
measure retirement plan success. Two in 10 respondents (20%) said they judge
a plan’s success according to the maintenance of a projected rate of return. Another 15% of advisers called the net present value of
projected assets against projected liabilities the most important measure of
retirement plan success.
Whatever the measure used by advisers, it is vital that financial
professionals and their clients find a meaningful reference point to discuss
sustainable income in retirement, Rod Greenshields, a consulting director for
Russell’s U.S. adviser-sold business, said in a statement accompanying the
“This reference point needs to be tied to actual desired
outcomes,” Greenshields said. “Yet today, very few advisers are approaching
retirement income planning in this way.”