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Filed Under:Annuities, Suitability

Retirement Portfolio Recovery Leaves Investors Behind

Photo credit: Nutdanai Apikhomboonwaroot
Photo credit: Nutdanai Apikhomboonwaroot

Advisors say their clients’ retirement portfolios have nearly recovered from the recession, but they aren’t sure their clients have. An SEI Quick Poll released April 5 found that a majority of advisors say their clients’ portfolios have largely recovered and 10 percent are doing better than they were before the recession.

The survey was conducted in March among 200 advisors during a webinar hosted by SEI Advisor Network.

Despite those successes, 60 percent of advisors report their boomer clients say suffering another significant stock market decline is their top concern. By comparison, just 7 percent say their clients are concerned about inflation and 3 percent say clients are worried about making bad investment decisions.

“The old mantra for retirement investing was, ‘Income, income, income.’ In reality, that’s far too simplistic,” Steve Onofrio, managing director of SEI Advisor Network, said in a statement. “Instead, investors may have multiple goals—income, growth and capital preservation—that are mirrored by a goals-based portfolio, in which separate pools of assets are aligned to each objective. We believe this approach to be an effective means of managing market volatility while ensuring that goals are met.”

One-third of advisors use a 60/40 strategy, the survey found, while more than half use a bucketing method. Just 12 percent use annuities as part of their clients’ retirement strategy.

“More and more advisors are moving toward goal-based investing,” Onofrio said in an interview. Advisors are allocating assets to achieve a particular goal, he said, whether that’s income or capital preservation, or achieving both while maintaining growth.

Onofrio notes that to get investors’ attitudes in line with the state of their portfolios, they need to communicate well and often.

“Our advisors are emphasizing communication,” he said. They’re setting goals up front and constantly updating their clients and keeping them focused on their long-term goals.”

“Most people feel like they’re almost back,” he said, acknowledging that “the scars are true.” Investors are more cautious, especially younger investors. “You think young investors are more freewheeling and tech-based, but they’re a lot more cautious. They’ve only lived through volatility,” he said. Unlike their parents and grandparents, who enjoyed long periods of growth, young investors started their accumulation years in unprecedented volatility.

“Advisors need to understand who they’re speaking to, to structure portfolios,” Onofrio said.

But, ultimately, “confidence is returning,” he said. “ ‘Cautiously optimistic’ is the word of the day.”

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Nichole Morford

Nichole Morford
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