The report from Aite Group assesses the state of the U.S. retirement income marketplace, which includes retail-distribution financial advisers, asset managers, insurance firms, online brokerages, and banks. The survey included 22 senior financial services executives.
The financial services professionals were asked, “Where is the retirement income industry today in terms of achieving optimal retirement income practices?” More than half of respondents (58%) said the industry as a whole is still either fully in or somewhat in the accumulation phase. Thirty-seven percent see the industry as being between accumulation and decumulation, 5% see the industry as being somewhat in decumulation and none see decumulation as fully realized.
Because of these results, Aite Group concluded that the retirement income industry is still in its infancy, with the shift from accumulation to decumulation evolving slowly. Investment outcomes and lessons from 2008 continue to weigh heavily on investors’ minds, and many consumers were unable to save adequately, according to Aite Group. As a result, retirement income firms across various silos—banks, broker/dealers, independent advisers, registered investment advisers (RIAs), insurance firms, asset managers and defined contribution recordkeepers—are grappling with the question of how to construct appropriate and suitable retirement income plans for clients across various wealth bands.
“The shift from wealth accumulation to decumulation is where financial advisers and distribution firms must transform their practice-management skills,” says Greg Cherry, senior analyst with Aite Group and author of the report. “The accumulation practices of the past are simply not sustainable as consumers demand less market risk and an increased focus on one day replacing their paychecks with retirement paychecks.”
The 33-page report is available to clients of Aite Group’s Wealth Management service.