Filed Under:Markets, Senior Market

Why investment products are a key priority for retirement income providers

Aggregate household assets held by individuals 65 and older will grow from $12.2 trillion in 2012 to $21.5 trillion in 2020.
Aggregate household assets held by individuals 65 and older will grow from $12.2 trillion in 2012 to $21.5 trillion in 2020.

The retirement income market is projected to grow to $12.9 trillion by 2020, new research shows.

Hearts & Wallets unveils this finding in its “2014 Retirement Income Competitive Landscape Survey.” One half of the report is based on an annual survey of 13 major manufacturers and distributors of investments with more than $15 trillion of assets under management/administration. The second half of the report analyzes 29 advice and guidance experiences available to Americans at or near retirement.

The retirement income market, composed of head-of-households who are age 65 and older and are drawing down retirement assets at 4 percent-plus annually, hit $4.5 trillion at year-end 2012. By year-end 2015, Hearts and Wallets expects the market to attain $6.4 trillion, then grow to $9 trillion in 2020 (base level) before peaking at $12.9 trillion later that year.

Over the same period, the report continues, aggregate household assets held by individuals 65 and older will grow from $12.2 trillion at year-end 2012 to:

● $14.8 trillion in 2015

● $20.2 trillion in 2020 (base)

● $21.5 trillion in 2020 (high)

Two in five survey respondents (38 percent) rate investment products as their firm’s most important retirement income priority, while an additional 46 percent rate it as very important.  

The manufacturers rate the following strategic priorities as most important or very important:

Manufacturers

Most important

Very important

Investment products (without guarantees)

50%

33%

Retirement planning services and tools

17%

33%

Advisor education/value-added programs

17%

33%

Income management accounts that connect investments to spending accounts

17%

17%

Investor marketing/customer education

17%

17%

Products with income features and guarantees

0%

17%

 

In most cases, significantly larger percentages of distributors qualify the same strategic priorities as a top priority or very important:

Distributors

Most important

Very important

Investment products (without guarantees)

29%

57%

Retirement planning services and tools

43%

43%

Advisor education/value-added programs

0%

71%

Income management accounts that connect investments to spending accounts

33%

50%

Investor marketing/customer education

14%

57%

Products with income features and guarantees

0%

17%

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