Allianz Study Finds A Conversation Gap In Retirement Planning

People who aren’t yet retired are worried about running out of money after they do retire. But they aren’t communicating that fear to their financial advisors, an Allianz Life study revealed.

The study findings show a conversation gap that advisors can use to help clients protect their retirement savings from risks such as longevity and market volatility, according to Kelly LaVigne, Allianz Life vice president of consumer insights.

Allianz found that although people who have already retired are fairly confident about how long their money will last, six in 10 nonretirees said running out of money before they die is one of their biggest concerns. But only about a quarter (27%) of nonretirees who work with a financial professional have discussed this aspect of longevity risk and less than 15% have shared their concerns that they won’t have enough money to do the things they want in retirement.

In addition, the study showed nonretirees are reluctant to set a formal plan with a financial professional, even though a substantial percentage of nonretirees are worried about saving for retirement.

More than half (55%) of non-retirees said they are worried they won’t have enough saved for retirement and nearly one-third (31%) say they are way too far behind on retirement goals to be able to catch up in time. Yet only 12% said setting long-term financial goals is their top priority and merely 6% identified developing a formal plan with a financial professional as their top priority.

“Financial advisors talk with clients on a regular basis about retirement planning and retirement income planning and Social Security and things of that nature,” LaVigne said. “But I think the key message from this study was, you might think you're saying these things, and maybe you are saying them, but your client either doesn't remember them or they're not talking to you about them.”

The lesson for advisors, LaVigne said, is “we have to do a better job of listening and letting clients talk.”

Wall Street A Threat

The ups and downs of the stock market are stoking Americans’ financial fears, with the Allianz study showing nearly half (49%) of all respondents identifying a stock market drop as the greatest threat to their retirement income.

Yet the study also revealed a reluctance to voice those fears with a financial professional. Fewer than 30% of Americans who work with a financial professional said they had discussed risks to their retirement arising from market drops, including only 22% of those within 10 years of retirement.

Many clients may not come right out and tell their advisor they are afraid of running out of money in retirement, LaVigne said, but they may instead say something like they are worried about volatility in the marketplace. It’s important for advisors to listen to what is behind a client’s spoken worry and guide the client to the heart of their financial concern.

“Advisors know what clients say they need or what they want to do, but clients aren’t comfortable with saying they’re afraid of running out of money or that they're afraid of inflation or market volatility,” he said. “This shows us we might not have as close a relationship with our clients as we think we have because clients are not sharing their greatest fears.”

The way to bridge this conversation gap, LaVigne said, is by asking clients to share their fears instead of expecting them to bring up their concerns on their own.

“Especially over the last months, bringing up the conversation around market volatility by telling your client, ‘You’ve seen your account go up and you’ve seen it go down. Here are some of the things we can do to cover you for these changes in the market, especially when it comes time to start paying your own paycheck. Here are some guarantees we can put into place to make sure you don’t run out of money.’”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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