The fact that so many Americans are not adequately preparing for retirement has been widely documented. However, in considering potential solutions to meet this challenge, the role of life insurers, annuity companies and other financial institutions, along with their intermediaries, is often overlooked.
The financial services industry has certainly devoted considerable resources to this effort, spending billions to market a growing number of products and services designed to address retirement needs. Furthermore, there are thousands of professionals of various stripes — financial planners, advisors, brokers and insurance agents — ready, willing and able to help consumers put together a formal retirement savings and income plan.
Analysis of the survey data revealed five main barriers inhibiting many Americans from taking a more disciplined approach to setting retirement goals, and putting in place the required mechanisms to achieve a secure future. These interconnected barriers are:
- Conflicting priorities: While retirement was a leading concern for a majority of the survey respondents, many cited difficulty balancing such long-term needs with other, often more immediate financial priorities.
- A failure to communicate: Financial institutions often do not effectively reach those who may need retirement planning advice and solutions, particularly via the workplace. And even when they do, they don’t necessarily address such needs as part of a broader financial plan taking into account other priorities.
- A lack of product awareness: Many consumers are simply not familiar with a number of retirement product options at their disposal.
- Mistrust in financial institutions and intermediaries: A significant number of individuals do not have a high degree of trust in anyone working for the financial services industry, whether in offering objective advice or delivering on what they promise when it comes to filling a consumer’s retirement needs.
- A “do-it-myself” mentality: A significant segment of consumers either don’t want, or feel they don’t need, professional advice in retirement planning. For many, this might be a short- sighted decision, given the complexity of retirement finances, the lack of awareness about the product options available, and the potential value an advisor could offer.
Potentially, many of these barriers could be overcome by adopting a more holistic approach, in which retirement needs are accounted for early in a customer’s lifecycle and in conjunction with other financial priorities. Changing the mindset of both consumers and retirement services providers to encourage a more integrated planning discipline is therefore a very important step in resolving the retirement dilemma.