SAN FRANCISCO – August 24th, 2022 – RetireOne®, the leading independent platform for fee-based insurance solutions, and Midland National Life Insurance Company (Midland National), a member of Sammons Financial Group®, today announced the results of the “2022 RIA Protected Accumulation + Retirement Income Survey”. The survey reveals that 82 percent of Registered Investment Advisors (RIAs) agree that clients are concerned about outliving their retirement savings, and 64 percent agree that clients worry about retiring on time. Despite this, the survey also suggests that RIAs may not have a clear plan for protecting client portfolios as they approach retirement, and may be focusing more on accumulation than decumulation.
The client concerns are real
More than nine in 10 advisors say clients are anxious about inflation’s impact on their retirement portfolios, while 70 percent are uneasy about the war in Ukraine and the impact of geopolitical instability on their nest eggs. Even with all of these concerns, in their joint survey of nearly 200 financial professionals, RetireOne and Midland National find that nearly all financial advisors (92 percent) believe they have the tools to keep their clients happy. But do they?
Only four in 10 respondents use income-planning software, while 85 percent use financial planning tools. When it comes to principal protection, 41 percent still allocate to certificates of deposit, 60 percent use money market accounts, and 49 percent keep clients in cash. Despite inflation climbing toward 9 percent and the creator of the four percent rule calling for a revision1 to the commonly-referred-to rule of thumb, RIAs still rank unprotected methods for generating retirement income ahead of lifetime income solutions.
“For 12 years markets performed extraordinarily well, and so did many advisors,” said David Stone, Co-Founder and CEO at RetireOne. “Still, with lingering volatility, advisors are searching for another way to best serve clients. While they’re hoping markets will come around quickly, it’s become evident that in times of turmoil, advisors need to offer clients protection for the retirement portfolios that they’ve been nurturing for years.”
Are volatility and rising interest rates making annuities more attractive?
Nearly half of RIAs who are using annuities cite guaranteed lifetime income as the primary reason they refer them to clients. In a recent whitepaper penned in partnership with RetireOne, Michael Finke, PhD, CFP®, outlines how longevity continues to improve for Americans, leaving the onus on advisors to ensure their clients don’t outlive their retirement savings. As new innovations such as contingent deferred annuities (CDAs) enter the market, Finke says establishing a fixed guaranteed income stream can provide portfolio income insurance to enable an advisors’ client to invest more aggressively.
“Portfolio income insurance allows a retiree to maintain a lifestyle free of the possibility that spending today could jeopardize their ability to live well later in retirement,” writes Finke.
Empowering clients to retire confidently
Constance, a CDA introduced by RetireOne and issued by Midland National in 2021, is designed to confront many of the current challenges advisors face with their clients. The portfolio income insurance solution allows RIAs to wrap client brokerage accounts, IRAs or Roth IRAs with lifetime income protection to combat longevity and sequence-of-return risks, while enabling advisors to continue to oversee client assets as they enter retirement and begin the decumulation phase.
“Americans need help to create long-term income from savings,” said Rob TeKolste, President of Sammons Independent Annuity Group, a division of Midland National. “It’s time for RIAs to prioritize holistic advice that includes both strategies for retirement income planning as well as asset accumulation. While our survey shows that advisors are using more guaranteed income solutions, many are lagging. An advisor must respond to the needs of their clients in the face of economic headwinds.”
RetireOne and Midland National developed the survey to help advisors realize the steps necessary to protect client income in retirement. For more insights from the “2022 RIA Protected Accumulation + Retirement Income Survey”, please visit the infographic.