Some HNW Individuals Push Back Retirement Plans

Research from Phoenix Companies found high-net-worth (HNW) consumers are altering their retirement plans in light of the financial crisis, but four in 10 are not talking to financial advisers about the crisis.

Phoenix Companies—which sells insurance and annuity products—said market volatility is leading to great interest in financial products with guarantee. Half (49%) of surveyed HNW consumers and 57% of surveyed advisers said that is the case, according to the survey results from Phoenix.

HNW individuals are concerned about how the market has affected their risk of outliving their assets and their need to change lifestyles, according to Phoenix. Three of 10 soon-to-be-retired HNW consumers are planning to retire at a later or much later date, and 38% are thinking that they might have to retire later than expected.

Adviser Help

Nearly three-quarters of high-net-worth consumers who have an adviser (72%) have discussed the impact of recent market volatility on their financial situation with their adviser. However, nearly half of these discussions were initiated by the client. Also, that means close to one quarter (23%) of surveyed high-net-worth consumers have not had a recent discussion with their adviser about their financial situation.

When added to the 17% of surveyed HNW individuals who reported not having a financial adviser, Phoenix found that four of 10 were navigating through the crisis without the guidance and advice of a financial professional.

“The message here is that this could be the best time to have a discussion with your clients about their financial situations,” wrote Walter Zultowski, senior vice president of Research and Concept Development at The Phoenix Companies, Inc., in the survey report. “For if nothing else, this is a time when they are perhaps most receptive to new ideas and product innovations that provide solutions to their financial needs and concerns.”

New Solutions

Zultowski said the current financial crisis might accelerate development of products that combine investment and insurance features, especially in the retirement arena. Phoenix found both advisers and HNW consumers are ripe for such innovation. “Increasingly, the high net worth will want investment products with features that guarantee either an account balance or a stream of income at a certain period in time—with retirement security being the primary objective,” he said.

Advisers reported the greatest exploration of guarantee features for clients planning to retire within five years (70%). But more than a third (37%) of advisers also increased investigation of guaranteed products for clients whose retirements are 10 or more years away.

Phoenix also found that the overwhelming majority of advisers (91%) would be interested in learning about a product that adds an insurance feature to investment products such as mutual funds, exchange-traded funds, or separately managed accounts. A similar number (89%) expressed interested in selling such a feature.

The survey was conducted with 204 HNW consumers with investable assets of $1 million or more and 201 financial advisers.