Retirement Income Planning an Increasing Part of Advisory Business

Most advisers who offer retirement income services said they had adjusted their business to do more retirement income planning over the past year, a study found.  

“Advisor Perspectives on Retirement Planning,” a LIMRA study, found that for four in ten advisers, retirement planning constitutes half or more of their business. More seasoned advisers tended to advise more clients on retirement planning.

 “With 10,000 Boomers turning 65 each day for the next 18 years, advisers are recognizing the substantial market for retirement income planning,” said Matt Drinkwater, associate managing director, LIMRA Retirement Research. “Advisers need to address the expanding scope of retirement planning that their clients might need, and assess the capabilities and expertise required to meet growing demand.”

He pointed out that LIMRA’s research found that only one-third of Americans feel they are saving enough for retirement, and a majority of pre-retirees—people within five years of retirement—feel they are not prepared for retirement.

“There is a great opportunity to help these consumers identify their financial needs in retirement and develop a sound plan to address them,” Drinkwater said. “As retirement income planning continues to increase for advisers, they and their firms are seeking ways to position themselves to offer more of these services.”

While there was no consensus on the retirement income strategy that will be used most often in two years, advisers often favor systematic withdrawal plans or, because of the flexibility, control and retention of assets, a “buckets” approach. (This is a plan in which short-term/fixed-return investments are used to generate current income; intermediate-term investments are gradually converted into short-term; and long-term investments are gradually converted into intermediate-term investments.)



In contrast, strategies in which guaranteed income sources are used to cover nondiscretionary expenses such as housing, food and health care, and nonguaranteed sources are used to cover discretionary expenses (for example, entertainment and travel) were less often expected to increase in popularity. These findings suggest that manufacturers of guaranteed income solutions must demonstrate how their products fit into other retirement income strategies in order to broaden their appeal.

Formal written retirement plans play a critical role in most advisers’ practices. Six in 10 advisers said that formal written plans are well received by clients. Earlier LIMRA research revealed that only three in 10 pre-retirees who have worked with an adviser have a written retirement plan.

Advisers agree that written plans offer:


  • An easy way to discuss product solutions (83%);
  • Better understanding of their clients’ goals (82%);
  • Higher client retention (81%);
  • The ability to obtain more rollover assets (72%); and
  • The ability to attract more referral business (71%).

An online survey was conducted in December 2011 of 1,042 financial advisers (registered investment advisers, registered representatives of broker/dealers, dually registered representatives, bank professionals and other advisers) who had been in their field for more than one year, and spent at least 10% of their business activities providing financial planning for retirees or pre-retirees.

A chart of the changes advisers have made in their practices to increase the amount of retirement planning they do is available here.