Want to retain retiree clients? Put their retirement income plan on paper

Investors prefer to get their retirement income plans in writing, but advisers tend to back away from giving clients a detailed blueprint. A survey by Fidelity Investments of 252 retirees and 252 pre-retirees who work with advisers showed that 81% of pre-retirees felt that a detailed plan is important, but only 18% of them had actually retirement income plans. Of that number, 53% have a detailed written road map on how to proceed with their retirement plans, according to the study. Financial advisers cited a variety of reasons as to why they preferred not to give clients a written financial plan, pointing to the difficulty of getting investors to focus on the future instead of the present, plus the fact that plans soon might become inapplicable given a fluctuating economic environment. As part of its study, Fidelity polled 527 financial advisers. The study was the result of two surveys: The Fidelity Advisor 2010 Survey of Investors at Retirement, conducted last July, and the Fidelity Advisor 2010 Survey of Advisers on Retirement Income, conducted in August. In practice, advisers are resorting to probability models — a preference among 88% of the polled advisers — and graphs or charts, which were used by 76%. Others said they were acting as a “life coach” to their clients, so the models didn't really work. Instead, financial advisers aimed for conversational techniques and storytelling to get the point across to the client. For advisers and investors, putting a 25- or 30-year plan into writing seems overwhelming, so the best way to proceed is to handle retirement planning on an incremental basis, said Larry Sinsimer, senior vice president of practice management for Fidelity Investments Institutional Services Co. Inc. He suggested that advisers start by talking about the first three years of retirement, discussing the transition out of the work force, budgeting and the cost of health care. “Even advisers who are doing it informally with some broad suggestions, the concern is about putting it in writing,” Mr. Sinsimer said. “This is setting a road map, a blueprint on how you're going to get to retirement.” Advisers can use the blueprint to invest a client's assets accordingly, keeping three years worth of liquid assets or cash to cover expenses for those years, along with low-volatility and intermediate-term investments for the next ten years — such as high-quality dividend-paying stocks. Money that won't be touched beyond the 10-year mark can be invested a little more aggressively, Mr. Sinsimer said. Investors with written plans seemed happiest with their advisers, according to the Fidelity survey. Sixty-three percent of pre-retirees and 69% of retirees with details on their retirement income plans said they were “very satisfied” with their advisers. Similarly, those “very satisfied” clients were more likely to pool their assets with their adviser: Pre-retirees in this category consolidated 72% of their savings and investments with their primary adviser, while retirees pooled 81% of their assets.