Forty-four percent of advisers are seeing an increase in clients tapping into their retirement savings to provide liquidity for the near-term, compared with 56% who have not experienced liquidation, according to Brinker.
Over the course of the year, advisers painted a bleaker picture of their clients’ retirement preparedness in Brinker’s surveys. At the start of this year, almost half (46%) of financial adviser respondents said their clients were still on track to a timely retirement (see “Advisers Say Many Clients Need More Time Before Retiring’). By the end of the year, advisers and their clients had a much bleaker picture of retirement: 88% of advisers now say their clients are off-target for a timely retirement, largely due to market depreciation, according to a Brinker news release. “Our year-end results make obvious what most advisers feared—that their clients’ retirement security has been severely jeopardized by ongoing market deterioration,’ said John Coyne, president of Brinker Capital.
When asked if their clients were on- or off-track to a timely retirement relative to their expectations a decade ago, 88% of advisers noted their clients are off-track. Of these respondents, 74% indicated it would take between one and five years to make up the retirement savings shortfall. As to the reasons for being off-track, 97% said “market depreciation;’ 51% noted “didn’t start saving soon enough;’ and 47% said “general procrastination.’
Brinker said one of the most vigorous adviser responses came from the question: “Are you seeing a disconnect between your clients’ responses on their risk tolerance questionnaires and the level of risk they are willing to take today?’ Three-fourths of financial advisers weighed in with a resounding “yes.’ When asked if they think there should be a reassessment of the way clients’ risk tolerance is measured, 76% said “yes.’
Advisers also said that clients have become more vocal/involved in the investment process (65%), although 31% said clients are still “neutral’ about their involvement. Only 4% said clients are “less vocal.’
Get Out of the Way
Advisers do not want a government mandate of employee and employer participation in 401(k)s (74%), according to Brinker. Overall, 92% of advisers agreed that “government should stay out of the management of 401(k)s.’
When asked if they believe that the proposed full fee disclosure regulations (with respect to qualified plans) are needed, 67% of respondents said “yes.’