The study found a shift away from 2005’s strategic priority of income planning services to investment products as a top priority in 2007. Thirty-three percent of respondents indicated investment products as their top priority in 2007, while in 2005, 50% of respondents considered income planning services their top priority.
“We project that the portion of total U.S. household wealth that is in “retirement draw-down mode” will expand five-fold by the time most of the baby boomers have retired,” said FRC research partner and study author Laura Varas, in an FRC press release. The big news is not the exact dollar figure of the market size in the future, but is the fact that the market hardly exists now where in a decade “a significant portion of U.S. wealth will be deployed in solutions that enable retirees to turn their assets into income,’ the news release said.
In defining the success of retirement income programs, more firms are using “sales’ than any other metric, including variation on sales, adviser measurement, or investor measurements. However, since the market is so nascent, focusing on sales may distort long-term strategy, FRC says.
Retirees without pensions are relying on their assets for much more income than their counterparts with pensions. This suggests investment strategies for people without pensions should be different than strategies for people with pensions. Currently, there are wide variations in individual firm targeting strategies, especially wealth targets, the report said.
The study also that that 59% of respondents believe retirement income and rollover are related in some way, but there are many views on how they are related and a substantial group (41%) actually sees them as “mostly separate.’
For more information on the FRC research, contact Trisha Langlois at FRC by calling 617-824-1204 or e-mailing Trisha.Langlois@frcnet.com.