Process Required for Success in Retirement Income

Adopting a process-centric approach to retirement income management will provide better service to clients and will lead to faster asset growth for the adviser, along with higher productivity and greater client retention.

Using a process approach, instead of a product or planning approach, will optimize sustainable retirement income programs for individuals, says the white paper, “A Process-Centered Approach to Retirement Income–Best Practices for Institutions and Advisors,” released this week by FundQuest, a provider of customized turnkey managed investment account solutions to financial institutions. The process approach suggested in the paper includes a complete cycle of analysis, planning, implementation, ongoing monitoring, and adjustment.

Currently, few financial services firms have invested in comprehensive retirement income platforms, the paper says. Advisers need a solution that allows them to answer the following questions for each client:

  • Will I have enough to retire?
  • Am I invested appropriately?
  • What is the best way to generate the income I need?
  • Will I have to work in retirement to support my lifestyle?
  • What are the trade-offs and key drivers?

The paper asserts that “good planning by itself or solutions driven by one-time single product sales are inherently insufficient to address the complexity of an individual client’s evolving retirement income needs.” Therefore, product-centric or planning-centric solutions are not a sustainable approach for advisers looking for a retirement-income management tool because they make it hard to reconsider ongoing risks such as longevity, health care costs, market risks, functional inflation, withdrawal rate and insufficient savings, impact of unplanned events, and bequest planning. Using a process-centered approach lets advisers cope with unexpected events and risks on a continuous basis. For example, ongoing monitoring processes help ensure that plan adjustments, often driven by major life changes and investment performance, are implemented on a timely basis, FundQuest says.

According to Bob Del Col, Chairman of FundQuest, “Financial institutions recognize the significant value that advisers and their clients can derive from a process that tightly integrates planning, implementation, and ongoing monitoring capabilities. Institutions also recognize that this integrated approach has significant advantages versus standalone retirement planning tools.”

Most advisers use some type of formalized retirement income software program to work with clients, the paper says. However, it continues, many of these products are “home grown,” solutions made by the adviser using components of the accumulation-based programs available in the marketplace, and advisers believe that their productivity in the retirement income market would improve if they had better retirement-specific software, tools for educating consumers, and more training. Rounding out the top five things advisers said would help their productivity were better lead generation and models or calculators to use with clients.

“Advisers and financial institutions have told us that one-time-single-product sales, and set-it-and-forget-it solutions are inadequate. With a comprehensive process, supported by automation and appropriate products, advisors can efficiently create and maintain individualized retirement income programs,” said Lisa Burns, co-author and FundQuest Retirement Product Manager.

Therefore, FundQuest says that the best way to address the needs of Baby Boomers in retirement is to develop a process-centric solution with three steps: plan, implement, and monitor. The paper details the practical actionable steps advisers can employ to address each investor’s specific needs in retirement and along each step of the process. The benefits of using a process-centered approach include, according to FundQuest: the ability to retain clients before and during retirement, asset consolidation, increased productivity, and comprehensive documentation of client data, goals and assumptions.

The paper says that one of the reasons this model works so well is that the adviser and the investor work closely together during the planning and analysis phase. With that close interaction with the adviser, clients are more likely to both proceed with the resulting investment recommendation and to consolidate their assets at the guiding institution because they feel they have been involved in the process of creating a unique solution for their situation.


The white paper is available at:

Del Col recently presented excerpts from the paper at the Retirement Income Industry Association’s annual conference (See Tackling the Retirement Income Arena Requires New Processes)