Retirees wary, but have multiple goals: study

When it comes to managing current retirement portfolios, one-third of advisors still use the traditional 60/40 portfolio as their primary strategy, believing income should be the primary concern. However, more than half (54%) do use bucketing and 12% use annuities.

“In reality, traditional plans are far too simplistic,” says Steve Onofrio, managing director of SEI Advisor Network. “Investors may have multiple goals—income, growth, and capital preservation—that are best mirrored by a goals-based portfolio instead, in which separate pools of assets are aligned to each objective in light of market volatility.”

While the majority of advisors say their clients’ retirement portfolios have now recovered, 10% say their portfolios are in actually in better shape now than they were before the recession and another 10% say their clients’ portfolios are still playing catch-up.

Boomers are most worried about suffering another significant stock market decline (60%) and about how much income they need for retirement (28%). Other topics weigh less heavily on their minds, such the impact of inflation on savings (7%) and the risk of making bad investment decisions (3%).

“Despite the market rebound, investors today are still focused on what could go wrong,” said Jaime Fukumae of Fukumae & Saman in California. “Advisors need to create an open dialogue with clients and discuss risk in context of their retirement goals, rather than just absolute returns and benchmarks.”

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He adds, “If advisors establish open lines of communication, clients won’t panic during the rough patches and will still attain multiple goals during their retirement years and reach their own definition of success.”

The survey was completed in March by more than 200 advisors during a webinar hosted by SEI about new approaches to retirement strategies. A replay of the webinar is available here.