Boom(er) or Bust: How Advisors Can Approach Retirement Asset Opportunities

Insights from @SEIJohnF on capturing retirement asset opportunities Click To Tweet


It is no secret that the baby boomer segment, the largest subset of assets in our industry, is moving from corporations and private retirement plans into the advisory domain. The total U.S. Retirement Market accounts for about $24 trillion in assets and, as of June 30, 2016, looks something like this:

Illustration 1a

This demographic shift marks one of the single largest opportunities for the advisor segment in history. Looking at the statistics associated with the baby boomer demographic provides insight into the size of the opportunity and how advisors can capture assets by understanding and addressing investors’ needs.

The opportunity

By narrowing the scope to households with investable assets above $100k, we can garner a better understanding of the multi-generational asset distribution opportunity for advisors:

Illustration 2a

The opportunity is clear and well known. The question becomes:

“How do advisors capture these assets over their peers?” The answer: Differentiation.

Meeting clients’ needs

Differentiation is in the details. How well do you know your clients and identify their needs, so you can provide services that meet those needs? These clients have very specific financial concerns and goals. By understanding them, you can tailor your solutions to address them. Here is a look at how the different generations view their financial goals and concerns.

Illustration 3a

Digging a little deeper and looking specifically at the services advisors believe are important versus the services that clients value, you can easily see a disconnect:

Illustration 4

Interestingly, creating a written financial plan is the only commonality shared in the top five of both lists, leading to the conclusion that advisors may want to change the priority of the basket of services they offer to better align with investors’ needs and attract more clients.

The cost of care

Going back to the concerns chart, most would guess the top two concerns clients have, but number three is popping up on almost every survey I’ve seen lately – the cost of healthcare. The Employee Benefit Research Institute estimates that, as of 2014, a married couple with Medicare and Medicare supplements will still need to save approximately $241,000 to have a 90 percent chance of having enough money to cover their medical expenses in retirement. Similarly, Fidelity Investments estimates that a married couple retiring in 2015 would require $245,000 to cover medical expenditures in retirement.

One way advisors can help clients address the challenge of paying for healthcare in retirement is dedicating a portion of their portfolios to healthcare expenses .

Hone your services

Looking at the baby boomer retirement opportunity in terms of the service mismatches and the most prominent concerns investors have when planning and entering their retirement years can help you hone your services to better meet investors’ needs. The rising costs of healthcare are a particularly notable consideration that presents an opportunity to educate your clients and help them navigate this hurdle. These elements should put an advisor on the right path to differentiate yourself in the market, help clients navigate this difficult time in their lives and, as a nice sweetener, grow your businesses.

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John Frownfelter

John Frownfelter

John Frownfelter is the investments contributor for Practically Speaking and the managing director of investment solutions within the SEI Advisor Network.

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