MY BLOG TOPICS

Wealth management clients want to be able to sleep peacefully at night. And I’m hearing from many wealth managers I meet with that many of their pre-retirement clients are not. They are worried about how to manage their assets as they age. The focus of their wealth management has been accumulation, with little discussion on the ins and outs of wise decumulation. This is an underserved need that could be a huge opportunity for wealth managers to deepen their existing relationships and gain new clients by serving them more holistically.

As people live longer, many Baby Boomers are left with questions—from the weighty (“Am I taking the right amount of risk to maximize returns as safely as possible?”) to the detailed (“Do I need to downgrade my annual vacation budget?”).

Put simply, clients want to know how long their money will last in retirement and what they need to do to maximize it. Ina recent survey, more than half (55 percent) of people polled are concerned about outliving their retirement savings.

Caring for children and aging parents, 50-something investors need an advocate for their own best interests.

In wealth management, we focus heavily on client milestones—the just-married couple, the single female buying her first home, clients ready to retire, etc.

But there’s a demographic I’m seeing that’s often overlooked in the current models: Fifty-somethings. Far from “just starting out” yet not “ready to retire,” this group is looking out for a more tailored customer experience. Only two out of five people aged 49-59 say they have a financial advisor actively helping them.

This group certainly has a number of needs advisors could help with, from funds planning to caring for aging parents and children, to inheritance and their own estate planning—not to mention looming retirement.

Adult children aren’t leaving the nest (yet). Half of 50-somethings who have children still have an adult child, aged 25 or over, living with them at home.

Lack of understanding and lack of trust reign. Only 35 percent say they have a good grasp of their investments and holdings. Yet, only one in four trusts an advisor to make investment decisions on their behalf.

Goals and actions might not be aligned. The three top desires for 50-somethings are retiring comfortably, keeping money safe and preserving as much wealth as possible. Yet, how many times do you hear a client in this age group say they’ve just given Junior money for a house down payment?

Less satisfied than any other group. Fifty-somethings have the highest dissatisfaction with financial advice of any age group in our research. One in three is “highly dissatisfied.”

The good news is, this profile leaves plenty of opportunity on the table for the industry to address.

The COVID-19 pandemic is a profound health and humanitarian crisis that has brought significant economic hardship for many people around the world, and it will continue to impact our lives for many months to come. At the same time though, we have witnessed an incredible spirit of resiliency with communities and companies coming together to support one another through these uncertain times. In some way, these days remind us of that quote from Charles Dickens, but flipped around: “it was the worst of times, it was the best of times…”.

The financial services sector has been largely at the forefront of the economic response to the crisis by providing liquidity through emergency financing, facilitating fiscal stimulus payments to citizens, and being there for customers’ urgent needs. Wealth managers especially had to play a key role with clients inquiring about their portfolios in the midst of some significant market volatility. Overall, for the wealth management industry, we see three phases of response to these uncertain times: Stabilization, Reconfiguration and Recovery.