Products March 8, 2022

CFP Board Rolls Out Advisory Firm ‘Roadmap’

The Certified Financial Planner Board of Standards has also published a new resource guide for firms, detailing the ways to engage with the CFP Board and its Center for Financial Planning.

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The Certified Financial Planner Board of Standards has released two new resources for firms to help them develop their financial planning capabilities and support their advisory professionals.

The first is called Designation Policy to Designation Strategy—A Roadmap for Firms. It urges firms to be intentional in the designations and certifications they approve.

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The second, a Resource Guide for Firms, provides firms with ways to engage with the CFP Board and its Center for Financial Planning to support and grow their CFP population.

Kevin Keller, CFP Board CEO, says the resources will support his organization’s mission of helping advisory firms grow their workforce while increasing the access Americans have to competent and ethical financial planning.

“In creating these resources, CFP Board aims to help firms equip advisers with the skills and education they need to meet clients’ changing needs,” he adds.

The CFP Board says the designation policy roadmap “addresses the emerging trend of advisers pursuing credentials simply for the sake of having letters behind their name.” To this end, the roadmap outlines how firms can evolve their financial planning services into a quality offering by “moving from a designation policy to an intentional strategy that focuses on the skills and knowledge advisers need to become competent financial planning professionals.”

The resource guide describes the full suite of services firms can expect to receive from CFP Board and the Center for Financial Planning to build out their financial planning programs. The guide offers information on such topics as how to leverage the CFP Board’s corporate relations team within an increasingly competitive landscape and how the Center for Financial Planning can help firms attract and retain talent and diversify their workforces.

Data & Research March 8, 2022

Latest Guide to Retirement Underscores Changing Landscape

J.P. Morgan says retiree income replacement needs have risen across the income spectrum and now range from 72% to 98%, depending on factors such as pre-retirement income level and location.

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J.P. Morgan Asset Management has released the 10th annual edition of its Guide to Retirement publication, featuring an extensive analysis of the most significant issues impacting retirement savers in the U.S.

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As explained by Katherine Roy, chief retirement strategist for J.P. Morgan Asset Management, the goal of the guide is to help investors make informed decisions and take positive actions to achieve a comfortable retirement.

“Retirement investors and advisers are grappling with a range of challenging issues, from an evolving inflation picture to an increase in forecasted spending needs in retirement,” Roy says. She also points to ongoing questions around Social Security’s long-term viability as a key challenge.

According to the guide, despite an anticipated short-term impact caused by the pandemic, the average life expectancy of U.S. workers continues to increase, meaning investors need to plan on the probability of living longer—potentially much longer for non-smokers who are in excellent health. The guide predicts many people, if they can retire in the traditional age range of 62 to 65, can expect to enjoy a nearly four-decade long retirement. Survey data underpinning the guide suggests “aging successfully” is a key priority for many workers.

This means many older workers and younger retirees will need to continue to invest a portion of their portfolio for growth. As inflation builds, this approach will be essential for retirees when it comes to maintaining purchasing power and quality of life.

According to the 2022 guide, retiree income replacement needs have risen across the income spectrum. Replacement ratios now range from 72% to 98%. The updated report also shows unstable spending patterns among retirees. For households with estimated investable wealth of $1 million to $3 million, average spending is highest between the ages of 50 and 55. Spending then declines reliably until about age 80, when it begins to rise again. According to the data, those at older ages tend to spend less on all categories but health care and charitable contributions.

One practical takeaway from the guide is that retirement checkpoint calculations can help investors to quickly gauge whether they are “on track” to afford their current lifestyle for 35 or more years in retirement, based on their current age and annual household income. As identified by prior editions of the guide, those with higher incomes tend to need to have more saved at any given point in their life to be considered on track—due to the lesser impact Social Security will have on their level of retirement income relative to their working income. 

J.P. Morgan Asset Management analysis also suggests that, when planning for retirement, it is critical to take a long-term view that addresses planning for health care costs separately. As the guide explains, older households purchase more health care, but they also purchase less transportation than households aged 35 to 44. This makes older people less vulnerable to the volatile energy category than younger households.

According to the guide, aligning retirement income and assets based on how they will be used to support an individual’s retirement lifestyle is one way to ensure a higher degree of confidence through retirement. Using the phrase “guarantee the floor,” the analysis shows how stable spending can be aligned with relatively safe or guaranteed funding sources, while variable spending can be covered by retirement income solutions and may require a cash reserve to be available through the year.

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