The Frustrations of Transition: Giving Advice Today While Sitting Between Chairs
Francois Gadenne has graciously agreed to cover for me until my return on May 16. He will be contributing a variety of essays addressing contemporary and future retirement income opportunities and challenges.
We saw yesterday that the retirement income industry may be in the early stages of a rapid differentiation phase of an evolutionary change process.
We also saw that this process may be propelled by an irresistible grassroots change caused by the demographics of the Baby Boomers.
The analysis of this (variously called) “tectonic”, “seismic”, or “sea-change” demographic situation and its implications is no longer controversial. Actually, it may even be fast becoming the consensus.
Our common and greater challenge today is how to position our businesses on the winning side of this change. Both manufacturers and distributors need to make hard-to-reverse decisions over the next years. The constant worry in the back of our mind as we look at the various choices: How do we avoid dead-ends?
While this change process will unfold over time, many who need to give investment and retirement income advice to investors feel that they are sitting “between chairs”. The old Accumulation products no longer look adequate. The Retirement Income products have not all appeared yet. We do not know who the winners are. We may not know for a while.
What can we do?
A good answer to difficult questions always seems to be: “It depends.”
Indeed what we can do depends in a large measure on the characteristics of the specific market segments that we serve.
If our market is the top-end of the High Net-Worth (HNW) segment, much of the retirement income discussion is irrelevant. The clients’ assets are many tens of times higher than their annual expenditures. Accumulation focused and efficient asset diversification advice continues to makes a lot of sense for many, if not most, of them. Legacy issues are their next significant concern.
As our clients move from HNW towards the Affluent and the Mass Markets, the retirement income discussion becomes increasingly relevant. This is where we meet the pressing advice needs of client cohorts that cannot wait until the retirement income winners become clear.
This is also the focus of RIIA’s September 17, 2007 Annual Meeting and Awards Dinner.
RIIA organizes its meetings around core topics and themes that appear most important and most urgent to the its members. RIIA’s 2007 Annual Meeting and Awards Dinner is organized around the following theme:
• How can the retirement income industry best help the Financial Advisors (FAs) during this “between chairs” transition from managing probabilistic accumulation investments to servicing retirement income consumers?
With a special focus on customer-facing communications, RIIA’s 2007 Annual Meeting and the Awards Dinner seeks to answer the following questions:
• What can FAs do to improve customer communications during this transition?
• What else can FAs do during this transition?
• What can FAs do to prepare for what happens after the transition?
• What can RIIA members do to support a timely and appropriate industry adaptation?
To add your voice to the discussion, join RIIA or attend the 2007 RIIA Annual Meeting and Awards Dinner on Sept. 17 at the Royal Sonesta Hotel in Boston. Better yet, do both.