Retirement Portfolios Look Solid, Yet Investors Still Quaking


The majority of financial advisers say their clients’ retirement portfolios are nearly recovered, but “the psychological scars run deep,” according to a poll from the SEI Advisor Network.



“The old mantra for retirement investing was, ‘Income, income, income.’ In reality, that’s far too simplistic,” said Steve Onofrio, managing director of  SEI Advisor Network. “Instead, investors may have multiple goals—income, growth and capital preservation—that are mirrored by a goals-based portfolio, in which separate pools of assets are aligned to each objective.”

While most advisers say their clients’ retirement portfolios have largely recovered, 10% say their portfolios are in “better shape now than they were before the recession;” 10% say their clients’ portfolios are “still playing catch-up.” Though one-third of advisers primarily use a single 60/40 strategy for retirement portfolios, more than half (54%) use “bucketing,” and 12% use annuities.

Most worrisome to Baby Boomers is the possibility of another significant stock market decline (60%) or how much income they need for retirement (28%). Only one in 10 advisers said their Boomer clients are most worried about the impact of inflation eroding savings (7%) or making bad investment decisions (3%).

“Despite the market rebound, investors today are still focused on what could go wrong,” said Jaime Fukumae of Fukumae & Saman, LLC from Lafayette, California. “Advisers need to create an open dialogue with clients up front, and discuss risk in context of their retirement goals—not just absolute returns and benchmarks. If advisers establish open lines of communication, clients won’t panic during the rough patches.”

The survey was completed in March 2012 by more than 200 advisers during a webinar hosted by SEI about new approaches to retirement strategies.