2008 Retirement Income Survey - Solving for X

Putting retirement income planning front and center

By Alison Cooke Mintzer See Archive >

As Baby Boomers reach traditional retirement age at an increasingly rapid pace, with the availability of traditional retirement income sources such as pensions and Social Security under pressure, and doubts about the adequacy of voluntary retirement savings levels, people must find innovative ways to maintain their standard of living far beyond their working careers. After years of educating participants about the need to accumulate retirement savings, the retirement plan industry now is beginning to focus on the importance of attending to the impending issue of helping retirees properly decumulate the fruits of their retirement savings endeavors in retirement planning’s “second stage.”

That already has brought a new generation of retirement income solutions to market—and that is an opportunity for financial advisers who will play an essential role in introducing and integrating retirement solutions as those at or near retirement attempt to make the right choice for their anticipated future, and plan balance. Products already capitalizing on this notion include traditional but tailored annuities, in-plan retirement income options, and distribution funds.

Earlier this year, PLANADVISER surveyed advisers about the retirement readiness of their clients and plan participants and asked about their involvement in retirement income planning and product knowledge of the various solutions being introduced by investment companies. On the pages that follow are the results of that survey, and a primer of sorts about the varied retirement income products available in the marketplace.

2009 PLANADVISER Retirement Income Survey

Time as an adviser to employer-sponsored retirement plans

Less than 1 year0.7%
1-3 years6.7%
3-5 years11.9%
5-10 years24.4%
10-15 years21.5%
More than 15 years21.5%



What is the size of your business (as of 12/31/2008)
Total assets under advisement: $740.2M average; $127.5M median
Total qualified plan assets: $512.4M average, $72.5M median

Assets under advisement representing retirement plans

Less than 50%19.3%



Number of qualified plan clients

Less than 1016.3%
41-60 20.7%
More than 60 24.4%



Type of adviser firm affiliation

National full-service wirehouse 22.2%
Independent broker/dealer33.3%
Regional broker/dealer9.6%
Insurance brokerage8.9%
Bank brokerage1.5%
Registered investment adviser (RIA)16.3%
Other 5.2%



Target market for retirement plan clients

$500,000 to $2,000,00025.9%
$2,000,000 to $20,000,00052.6%
$20,000,000 to $75,000,00017.8%
$75,000,000 to $200,000,0003.7%
More than $200,000,0000.0%



Provide individual wealth management services



If you do not provide individual wealth management services, you:
Refer to another team member55.7%
Refer to an outside firm16.4%
Do not get involved/no referral26.2%




Manage retirement plan distributions for retirement plan participants in client plans

Yes 70.4%

Believe that plans have a responsibility to manage retirement income distributions for retired participants




Recommend the inclusion of retirement income investments in a retirement plan investment lineup




Income needed to live comfortably in retirement

More current gross income3.0%
Same as current gross income23.7%
90% of current gross20.7%
80% of current gross36.3%
70% of current gross14.1%
60% of current gross2.2%
Less than 60% of current gross0.0%



Clients on track to reach their retirement savings

90%-100% 0.0%
Less than 50%46.7%



What are some responses your clients have had to try to make up a savings shortfall?

Reallocating investment options46.7%
Increasing savings rate80.0%
Changing/delaying retirement age93.3%
Changing standard of living in retirement54.8%
Going back to work46.7%



How attractive are the following types of investment options for use in retirement income planning/distribution?
1 is least attractive, 5 is most attractive

Payout mutual funds2.73 
Fixed annuities  3.45
Variable annuities 3.15
Variable annuities with GMWB* 3.77
Mutual funds/fixed annuity combination3.87 
Absolute return mutual funds2.92
Dividend-paying mutual funds3.54
Fixed income/stable value3.58 


*guaranteed minimum withdrawal benefit


 How familiar are you with the following types of investment options?

 Very familiarSomewhat familiarSomewhat unfamiliarVery unfamiliar
Payout mutual fund25.2% 40.7% 20.7% 13.3%
Fixed annuities75.6% 21.5% 3.0% 0.0%
Variable annuities77.0%20.7%2.2% 0.0%
Guaranteed minimum withdrawal benefit 58.5% 24.4% 14.8% 2.2%
Combination of funds and fixed annuities61.5%28.1% 8.9% 1.5%
Absolute return mutual funds40.0%36.3%17.8%5.9%
Dividend-paying mutual funds 82.2% 14.1% 1.5% 2.2%
Fixed income/stable value86.6%11.9%0.7% 0.7%






Likelihood that participants' savings and known sources of income will be sufficient to sustain their retirement income needs

Very likely 0.7%
Somewhat likely16.3%
Somewhat unlikely49.6%
Very unlikely33.3%




Criteria used when deciding appropriateness of funds for retirement income

Accessibility of money/liquidity63.7%
Adviser support24.4%
Brand/financial strength40.7%
Fee structure for adviser8.1%
Fee structure for investor43.0%
Growth potential23.0%
Performance 33.3%
Performance vs. benchmarks47.3%
Supporting materials7.4%
Underlying investment options48.1%






In April and May 2009, approximately 4,700 online survey questionnaires were sent to financial advisers from the PLANADVISER magazine database, and the survey link also was posted in the PLANADVISER and PLANSPONSOR e-newsletters. We received 181 responses before the close of the survey on May 8, 2009, of which 135 completed the survey in its entirety and passed our eligibility criterion that the respondent be an adviser to employer-sponsored retirement plans.

The questionnaire, developed solely by PLANADVISER, consisted of 20 questions. The topics covered by the questionnaire included the retirement readiness of advisers’ clients and plan participants, their involvement in retirement income planning, and their product knowledge of various solutions being introduced by investment companies and the attractiveness of those solutions for retirement income distributions.


2009 PLANADVISER Retirement Income Buyer’s Guide

Below, you will find a sampling of some of the new retirement income investment options as well as the key providers in this space. We hope that you will find it to be a useful starting point in considering and evaluating these choices, and in helping your plan sponsor and participant clients to better understand their options (see also “The Inside Story,” PLANADVISER September-October 2008; “As Good as Annuity” July-August 2008; “Funds Move to the Next Level,” January-February 2009; “Funding a Carefree Retirement,” Buyer’s Guide 2009).


American General | Houston, TX

Product(s) Offered

  • Out-of-plan rollover annuity
  • In-plan deferred fixed annuity
  • Fixed- and variable-income annuities

Organizational Structure

2009 Product Development Initiatives

AXA Equitable Life Insurance Company | New York, NY

Product(s) Offered

Out-of-plan rollover guaranteed minimum withdrawal benefit

  • Along with the rollover product, AXA Equitable's Corporate Markets provides fact-based education and ongoing support to employees before, at, and after retirement delivered through worksite seminars, Web-based tools, and support via a service call center. Individuals specifically trained to support the large corporate market are available at the worksite to provide employees education and information on retirement planning.

External Partners
WMSI—Wealth Management Systems, Inc.

Organizational Structure
AXA Equitable Life Insurance Company is a leading financial protection company and one of the nation's premier providers of life insurance, annuity, and investment products and services. The company launched its Corporate Markets business unit in January 2008 to provide retirement plan strategies and products to Fortune 1000 companies and their employees, offering education, ongoing support, and guaranteed income products to individuals as they accumulate retirement assets in their 401(k) plans, and transition to the distribution phase at retirement. Corporate Markets products and services are distributed at the institutional level through a dedicated sales force specifically trained to support the large corporate market.

2009 Product Development Initiatives

Barclays Global Investors | San Francisco, CA

Product(s) Offered

  • In-plan income accumulation fund

Organizational Structure
BGI has a dedicated defined contribution (DC) research group, which allows the firm to drive innovation across all DC products and has contributed directly to BGI's thought leadership in the DC space.

2009 Product Development Initiatives


Metropolitan Life Insurance Company | New York, NY

Product(s) Offered

  • Out-of-plan rollover annuity
  • Out-of-plan nonguaranteed option
  • In-plan deferred fixed annuity
  • Out-of-plan immediate fixed- and variable-income rollover annuity
  • In-plan and out-of-plan longevity insurance
External Partners
  • Hueler Income Solutions
  • Barclays Global Investors
  • Merrill Lynch Retirement Group

Organizational Structure
MetLife's Institutional Income Annuities product development group is part of our Institutional Business channel. We deliver our products and services directly to plan sponsors and through strategic alliances. We provide full call center and Web-based participant support for our Institutional clients and their employees.

2009 Product Development InitiativesMetLife is always evaluating other annuity product alternatives that are suitable for the employer-sponsored retirement market.

Nationwide Financial | Columbus, OH

Product(s) Offered

  • Out-of-plan rollover annuity
  • Clear Horizon Index Annuity
  • Securate Fixed Annuity
External Partners
  • ELM Income Group

Organizational Structure
The part of Nationwide's organization supporting rollover products for retirement plans is part of its regular business line, which develops products for retirement income solutions.

2009 Product Development Initiatives

OppenheimerFunds | New York, NY

Product(s) Offered

  • Lifetime Income Distributor
  • Retirement Income Manager
  • OppenheimerFunds' Retirement Income Suite is a group of financial solutions specifically designed to help advisers manage client income-distribution needs. Lifetime Income Distributor is an investment and income management program for use by financial advisers. It is used to distribute a predictable cash flow to clients and simplify ongoing investment management for the financial professional.  It combines modeling software used to determine sustainable income amounts, professional asset management capabilities through OFI’s Portfolio Builder program, and income-distribution support through systematic withdrawal programs. Retirement Income Manager runs 2,000 Monte Carlo simulations of investment scenarios and produces a custom report that projects a client’s probability of meeting retirement income needs and wealth transfer goals. The software also compares current allocations according to a client’s risk profile, and offers suggestions of possibly improving his or her chance for success in reaching retirement goals. OppenheimerFunds offers this to financial advisers free of charge.
  • OppenheimerFunds’ Client Connect Advisor Education series is a comprehensive sales and training program designed to help advisers organize their business and create lucrative new selling opportunities. Designing a Successful Retirement Income Plan is a Client Connect program that focuses on an organized plan comprised of five key elements to utilize in order to successfully create a Retirement Income Plan. OppenheimerFunds has created various educational materials in order to educate both advisers and clients on differing withdrawal strategies that can be utilized in retirement.

Organizational Structure
The strategic long-term plan, managed by Retirement Solutions, is to continue educating advisers and clients through research OppenheimerFunds conducts and to provide retirement income investment solutions for advisers to use with their clients.

2009 Product Development Initiatives
OppenheimerFunds’ Retirement Income Suite is a group of financial solutions specifically designed to help advisers manage client income-distribution needs. The Retirement Income Suite is flexible and will grow in response to evolving client and adviser needs.

Principal Financial | Des Moines, Iowa

Product(s) Offered

  • Out-of-plan rollover annuity
  • Out-of-plan rollover guaranteed minimum withdrawal benefit (GMWB)
  • Out-of-plan nonguaranteed option
  • In-plan income annuity
  • The Principal aligns around financial professionals to provide a comprehensive suite of educational materials and planning tools, thought capital, and business tools on retirement income strategies and products.

Organizational Structure
The Principal has dedicated individuals working on the development of products and services for retirement plan participants who are nearing and in retirement. These individuals can provide education, guidance, and tools to help advisers create retirement income strategies tailored to each individual investor's specific needs. The Principal also provides a breadth of solutions, including mutual funds, annuities, bank products, and more, all under one roof. And we provide a dedicated team of retirement planning experts to assist advisers with retirement income planning questions as well as any questions about our retail products.

2009 Product Development Initiatives
In 2009, The Principal will continue to research and identify potential gaps and opportunities to add products and solutions to enhance its retirement income solutions.


Prudential Retirement | Hartford, CT

Product(s) Offered

  • In-plan guaranteed minimum withdrawal benefit

Organizational Structure
Prudential IncomeFlex is supported by the Institutional Income Innovation Group within Prudential Retirement. Prudential Retirement, working in concert with plan advisers, has developed a comprehensive Retirement Readiness curriculum and engagement plan for defined contribution participants. Also, it offers a comprehensive product suite of innovative, leading-edge retail annuities distributed through Prudential Annuities and independent advisers.

2009 Product Development InitiativesPrudential Retirement plans to remain an industry leader in Institutional Retirement Income and continue to enhance and deliver cutting-edge retirement income products in 2009.

UBS Global Asset | London, England

Product(s) Offered

  • Out-of-plan rollover annuity
  • Out-of-plan rollover guaranteed minimum withdrawal benefit
  • In-plan guaranteed minimum income benefit
  • In-plan guaranteed minimum withdrawal benefit
  • In-plan income accumulation fund

External Partners
Genworth Life and Annuity Insurance Company

Organizational Structure
Retirement income product development occurs within the overall product development and management framework of UBS, but with dedicated personnel for retirement income initiatives. Delivery of retirement products is through the existing institutional sales force of UBS, which includes a number of client advisers who specialize in retirement income.

2009 Product Development Initiatives
Genworth is exploring a full spectrum of retirement income solutions for 2009.