High Net Worth Clients Trust Pros in Retirement: Study

While recent studies, including one conducted by Spectrem Group, have shown that high net worth individuals don’t always rely on financial professionals to manage their investments, those trends seem to shift as clients approach and enter retirement. As a new survey from LIMRA has proven, as many as 80 percent of high net worth households choose to entrust their retirement investments with a financial professional. An increasing reliance on financial professionals has broad implications for the future of retirement savings and investments.

Growing numbers

According to the LIMRA study, there are approximately 48 million retirees in America today, a number that will only grow as people continue to live longer and healthier lives. By 2023, researchers estimate $25 trillion in assets will be in the possession of American retirees. This presents a massive opportunity for financial professionals to gain the trust of America’s most senior generation.

As they begin to retire, they face a landscape filled with challenges related to financial planning and asset management. Half of the retirees polled in the study reported retiring before they had planned to originally. Another half are worried about their financial future as they enter this time in their life, with many unsure if their savings and investments are enough to maintain their quality of life for an undetermined length of time. Indeed, one out of four men who retires at 65 will live to be at least 93 years old, and a quarter of women who retire at the same age can expect to see their 95th birthday. With this level of uncertainty, it’s no wonder why a quarter of high net worth households choose to entrust 90 percent or more of their assets to a financial professional.

Peace of mind a priority

Seniors told LIMRA researchers their primary goal when beginning retirement was to have enough savings to last the rest of their lives. When working with a financial professional to establish long-term income sources, they were motivated to do so for the peace of mind it brought them. This likely explains LIMRA’s estimation that the annuities market will continue to grow significantly in the coming years. Total annuity sales will reach $22 billion by 2019, according to the study. Being only five years out, financial professionals may have their work cut out for them in working with the surge of retirees who want to secure a stable future for themselves and their families.

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