Mass Affluent Households Need Engagement

Most households with $100,000 to $500,000 in investable assets for retirement have no formal retirement income plan or are not engaged with a financial adviser.

The findings—from the Cerulli Edge-Retirement Edition, 3Q Issue—are significant, because they indicate that some investors are entering retirement without an income plan for the next 20 or so years of their lives, said Tom Modestino, associate director at Cerulli Associates. “We found that many retirees in the $100,000 to $500,000 asset range are not working with a financial adviser,” Modestino added.

The silver lining, according to Alessandra Hobler, an analyst at Cerulli, is that this represents a great opportunity for asset managers, broker/dealers and retirement plan providers to increase retirement income planning education. Many investors will welcome the guidance. “This lack of planning can result in rollover opportunities after retirement,” Hobler said.

Although pre-retirees should be a primary target for advisers hoping to provide retirement income planning, more than half of retired investors do nothing in advance of retirement.

While investors in their 50s are likely to report that they have not gotten around to consulting an adviser, investors in their 60s are likely to say they do not need retirement advice. Therefore, the sweet spot for asset managers to target with the message of retirement income is investors in their late 50s.

Though relationships between providers and investors are formed through the retirement asset accumulation stage, for firms that have not had the opportunity to work with investors at this stage there is still the potential to garner rollover assets at the time of retirement.


More information on Cerulli’s research is here