As Boomer Retirement Wave Looms, Advisor Opportunities Abound

The key to a happy retirement is “being financially secure,” said 58 percent of adults surveyed by Northwestern Mutual recently.

The question for the financial services industry is: How can you help your clients get there, said Angela DiCastri, director of retirement market, planning and sales for Northwestern Mutual.

DiCastri is part of a panel that will discuss financial literacy Friday at the LIMRA 2016 Retirement Industry Conference in Boston. With millions of baby boomers inching closer to retirement every month, opportunities abound for advisors to lead a “larger, social discussion” of financial literacy, she said.

“How do we help people save?” she asked. “And more importantly, how do we get them to realize the need to save?”

As a nation, American workers are $6.6 trillion short of what they need to retire comfortably, according to data from Boston College's Center for Retirement Research.

In 1979, Americans saved 10.6 percent of their earnings. Today it is 5.2 percent, DiCastri said, adding that 28 percent of workers had pensions in the late 1970s.

“So it’s kind of a double whammy for consumers,” she said.

A variety of products can address retirement needs effectively, DiCastri said. Those products range from life insurance and annuities, to the stock market and mutual funds. The key is getting consumers to think responsibly and create a financial roadmap for retirement.

“Any individual product can work or can be a complete failure, depending on the plan,” she said, adding that taxes, legacy needs and other factors are key parts of holistic planning. “It’s really about how all of those pieces work together to meet the needs of that client.”

The Northwestern Mutual survey, conducted by Harris Poll, revealed changing attitudes about retirement goals. Happiness and security are valued considerably more than wealth, opportunity and moving up in social class, the survey found.

When asked about the most defining characteristics of The American Dream today, the top two answers were: “Having a happy family life” (59 percent) and “being financially secure” (58 percent).

See Yourself in the Future

The better an advisor can connect a client to the reality of a future self, the closer the client will be to making responsible planning decisions, DiCastri said. It’s an idea others in the financial services industry endorse.

“What does it look like when you’re 90? Or when you’re 80?” she asked. “You retired yesterday – what do you envision yourself doing? Starting with that kind of budget side of it to help them understand what kind of activities they are going to be doing.”

While the needs of individual clients would seem to be a private matter, the lack of retirement security will cost everyone if it isn’t addressed, DiCastri said. She likened it to the 2008 mortgage crisis, when the fallout from risky loans affected every homeowner in the form of reduced home values.

The retirement crisis has attracted attention from all levels of government, with officials proposing various forms of autosave programs. If the financial services industry doesn’t do its part, DiCastri said, everyone will eventually pay.

“We’re going to have to help support the folks who aren’t on track,” she said. “The challenge is, what happens when all those folks who haven’t saved now end up on Medicaid, on food stamps and government assistance programs, and all of those kinds of things? And what happens to those who have saved?”

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].
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