"SETBACKS ARE A natural part of life, and you've got to be careful of how you respond with them."

-Lee Iacocca, Iacocca: An Autobiography 

This is an interesting quote and it should serve as a reminder that we encounter changes every day throughout our lives, whether we want change to happen or not.  For example, people get married, others get divorced, and many of us may know people who will have children or grandchildren this year.  We might have clients who pass away.  As investment professionals, these changes may also be impacting your business lives.  The baby boomer age-wave and their increasing demand for retirement income planning services may lead to changes, challenges, and opportunities.  

• Some clients perceive the need to change advisors as they approach retirement.  In fact McKinsey & Co. has found that 75% of clients will switch or add an advisor in the 15 years leading up to retirement.¹ 
• More of an advisor’s time will be spent doing income planning for clients as the client base ages, leaving less time for prospecting.  An analysis by Cerulli Associates and Fidelity Investments concluded that advisors may have to spend as much as 22% more time with clients near or in retirement who are demanding retirement income planning services, when compared to time spent with younger clients seeking accumulation planning assistance. ²  This is generally the result of the increased complexity specifically associated with retirement income planning.
• Advisor compensation may be negatively affected by aging clientele who may shift a greater portion of assets to fixed-income funds which typically generate lower commissions.  Also, as many clients move into retirement, there may be a shift in their assets from accumulation to distribution.  

Advisors should be mindful about how they respond to these challenges.  Retirement income planning may present opportunities such as improved client satisfaction, increased asset consolidation, and more referrals.  Keeping that in mind, advisors should not let the challenges become setbacks. 

Fidelity Investments Institutional Services Company, Inc.’s white paper – “Adapting a Practice for Retirement Income Planning” – outlines five key strategies advisors can implement in their practice.  This white paper is a based on Fidelity’s extensive analysis of industry trends and in-depth advisor interviews.  The five key strategies for advisors are:

1. Become proficient in all things retirement and create a retirement specialist brand.
2. Use health care knowledge as a differentiator.
3. Combine income planning with effective client management strategies.
4. Evolve to a more efficient, profitable business model.
5. Refine client acquisition strategies for retirement income planning. 

This white paper illustrates how advisors can implement these strategies in their practice, and offers many resources to help them take action.  The whitepaper and additional information are available by calling Fidelity Investments Institutional Services Company, Inc. at 800-544-9999, or going to http://www.advisor.fidelity.com/individualretirement/ and clicking on “Fidelity Advisor Retirement Income Services” under the “Income Services” heading.

¹ Managing Retirement Income: Innovative Strategies to Capture and Retain Income, 2006. 

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